3. Rule versus discretion This question below addresses whether monetary policy should be discretionary or be implemented following a set of rules. Which of the following statements argues against a rule-based policy? Check all that apply. Monetary rules may lead to a lower sacrifice ratio because the public is more confident that the Federal Reserve will keep inflation low. ✔The Federal Reserve may use monetary policy to affect the outcome of elections. ✔ Monetary rules reduce the flexibility of the Federal Reserve. It is impossible for a policy rule to consider all the possible scenarios and specify, in advance, the right policy response. It is better to appoint qualified individuals who will respond to any situation as best they can.

3. Rule versus discretion This question below addresses whether monetary policy should be discretionary or be implemented following a set of rules. Which of the following statements argues against a rule-based policy? Check all that apply. Monetary rules may lead to a lower sacrifice ratio because the public is more confident that the Federal Reserve will keep inflation low. ✔The Federal Reserve may use monetary policy to affect the outcome of elections. ✔ Monetary rules reduce the flexibility of the Federal Reserve. It is impossible for a policy rule to consider all the possible scenarios and specify, in advance, the right policy response. It is better to appoint qualified individuals who will respond to any situation as best they can.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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