n questions 48-50, which statement best summarizes Friedman's

views on the role of monetary

policy?

48. Monetary policy should best be conducted by:

[1] controlling the price level.

[2] controlling the interest rate.

[3] controlling the money supply.

[4] targeting the inflation rate.

[5] All of the above.

49. Monetary policy can:

[1] cushion the effect of aggregate demand and supply shocks to

the economy.

[2] stabilize the business cycle over time.

[3] increase growth and employm

ent at the cost of a high rate o

f inflation in the long run.

[4] prevent the occurrence of contractions in output and employ

ment if used sensibly,

such as following a fixed monetary growth rate rule.

[5] All of the above.