Milton Friedman Argued That the Fed's Control Over the Money

question 192

Multiple Choice

Milton Friedman argued that the Fed's control over the money supply could be used to peg

• A)the level or growth rate of a nominal variable, but not the level or growth rate of a real variable.
• B)the level of a nominal or real variable, but not the growth rate of a real or nominal variable.
• C)the level or growth rate of a real variable, but not the level or growth rate of a nominal variable.
• D)both levels and growth rates of both real and nominal variables.

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Definitions:

Aggregate Demand

The total amount of goods and services in an economy that will be purchased at all possible price levels in a given period.

Aggregate Supply

Aggregate supply is the total supply of goods and services that firms in a national economy plan to sell during a specific time period, affected by several factors including production costs and labor availability.

Short-Run

A period in economics where at least one input is fixed, usually applied to analyze immediate impacts on the economy.

Money Supply

The full quantification of financial means in an economy at a certain point in time, including tangible currency like coins and notes and virtual balances in checking and savings accounts.