Chapter 17, Problem 4AA

To determine

To choose: The suitable word that best completes the sentence.

Explanation of Solution

The suitable word that best completes the sentence is guidelines.

According to the monetarists, the Federal Reserve should maintain a steady growth in money supply by setting strict guidelines for maintaining inflation and unemployment. The rate of inflation and unemployment if can be maintained by Fed, Fed can stabilize the economy more effectively.

Economics Concept Introduction

Introduction:

Monetary rule- The Federal Reserve should operate the money supply in a manner that the growth is smooth, and the growth rate is consistent. This is suggested by monetarists as a rule that the Federal Reserve should not use monetary policies to accelerate or slow the economy.