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LogoutMilton Friedman proposed the K-Percent Rule, which said that the central bank should raise the money supply by a certain amount every year.
The K-Percent Rule recommends that the money supply expanded at the same pace as the economy every year. The gross domestic product (GDP) is a measure of an economy’s growth in terms of all commodities and services generated. Based on historical norms, the normal GDP growth rate in the United States is 2-4 percent. The K-Percent Rule would enable the economy’s money supply to increase at the same rate as GDP.