1. Milton Friedman argued that:

• the effectiveness of expansionary fiscal policy is often limited by the effects of crowding out.
• a central bank following a monetary policy rule would destabilize the economy. 
• a discretionary monetary policy should be used to offset the fluctuations of the business cycle.
• the velocity of money is unstable.

2. To the extent that there is volatility in the velocity of money:

• people will not be able to plan the timing of their consumption expenditures.
• the natural rate of unemployment will be lowered.
• Congress will have to execute monetary policy, rather than the Federal Reserve.
• a monetary policy rule will not be an effective tool of stabilization.

3. The Friedman-Phelps (natural rate) hypothesis predicted that:

• effective policy action by the Federal Reserve could keep unemployment below its natural rate.
• effective policy action by Congress could keep unemployment below its natural rate.
• the apparent tradeoff between inflation and unemployment would not survive once expectations of high inflation were built into public perceptions.
• the velocity of money would become volatile when the economy reached a situation of full employment.

4. If fiscal policy is used to stimulate the economy at a key time prior to an election:

• there will be no short-term effect on unemployment.
• the result will be a political business cycle.
• it will not create any inflationary pressure.
• it will cause a supply shock rather than a demand shock.

15. The Federal Reserve adopted a monetarist approach when it:

• announced target ranges for the money supply and dropped interest rate targets.
• announced target ranges for interest rates and dropped money supply targets.
• ceased engaging in open-market operations.
• tried to push the rate of unemployment below the natural rate.