This question addresses the issue of whether monetary policy should be made by discretionary policy or be implemented according to a set of rules. Which of the following statements reflect arguments against policy by rule? Check all that apply. O The Federal Reserve may use monetary policy to affect the outcome of elections. O 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. O Monetary rules may lead to a lower sacrifice ratio because the public is more confident that the Federal Reserve will keep inflation low. Monetary rules reduce the flexibility of the Federal Reserve.

This question addresses the issue of whether monetary policy should be made by discretionary policy or be implemented according to a set of rules. Which of the following statements reflect arguments against policy by rule? Check all that apply. O The Federal Reserve may use monetary policy to affect the outcome of elections. O 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. O Monetary rules may lead to a lower sacrifice ratio because the public is more confident that the Federal Reserve will keep inflation low. Monetary rules reduce the flexibility of the Federal Reserve.

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter15: Monetary Theory And Policy

Section: Chapter Questions

Problem 2.5P

See similar textbooks

Similar questions

How does rule-based monetary policy differ from discretionary monetary policy (that is, monetary policy not based on a rule)? What are some of the arguments for each?
In what ways might monetary policy be superior to fiscal policy? In what ways might it be inferior?
Suppose now that economists expect the velocity of money to increase by 50 as a result of the monetary stimulus. What will be the total Increase in nominal GDP?
A well-known economic model called the Phillips Curve (discussed in The Keynesian Perspective chapter) describes the short run tradeoff typically observed between inflation and unemployment. Based on the discussion of expansionary and contractionary monetary policy, explain why one of these variables usually falls when the other rises.