With the advent of big data and increased computing power, some people have advocated for monetary policy by algorithm. Basically, real time data are fed into a program that then determines monetary policy decisions. What are some potential benefits of this approach? Changes to monetary policy would be perfectly predictable. It would prevent the Fed from engineering potentially inflationary short-term economic booms. It would enable Fed policy to respond flexibly to unforeseen economic developments.
With the advent of big data and increased computing power, some people have advocated for monetary policy by algorithm. Basically, real time data are fed into a program that then determines monetary policy decisions. What are some potential benefits of this approach? Changes to monetary policy would be perfectly predictable. It would prevent the Fed from engineering potentially inflationary short-term economic booms. It would enable Fed policy to respond flexibly to unforeseen economic developments.
Economics (MindTap Course List)
13th Edition
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter15: Monetary Policy
Section: Chapter Questions
Problem 4WNG
Question
please answer in text form and in proper format answer with must explanation , calculation for each part and steps clearly

Transcribed Image Text:With the advent of big data and increased computing power, some people have advocated for monetary policy by algorithm.
Basically, real time data are fed into a program that then determines monetary policy decisions.
What are some potential benefits of this approach?
Changes to monetary policy would be perfectly predictable.
It would prevent the Fed from engineering potentially inflationary short-term economic booms.
It would enable Fed policy to respond flexibly to unforeseen economic developments.
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