some people believe that monetary policy should be made by rule rather than by d

Question

some people believe that monetary policy should be made by rule rather than by discretion. One belief is

a. setting a policy rule will limit the abuse of power of policy makers.

b. policy makers can better influence the political business cycle in their favor when following a policy rule.

c. a policy rule provides policymakers with the greatest flexibility to manage inflation.

d. if the fed was required to follow a low inflation policy, the economy would face a less favorable short run trade off between inflation and unemployment

Explanation / Answer

Correct Answer:

Explanation:

Besides limiting abuse, it also limits incompetence that can help in controlling inflation and stabilizing economy.

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