why-is-a-steady-growth-rule-in-the-money-supply-important-for-managing-inflation

Question

Why is a steady growth rule in the money supply important for managing inflation expectations in the New Classical Model?

Accepted Answer

It helps firms and workers make better predictions about future inflation.

Answer

It ensures that inflation remains unpredictable and volatile.

Answer

It eliminates the need for any monetary policy.

Answer

It causes inflation expectations to become irrelevant.