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Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383

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BuyFindarrow_forward

Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383
Textbook Problem

Outline the details of the debate between economists who favor a rules-based monetary policy and those who favor a discretionary monetary policy.

To determine

Outline the details of debate between economist who favor rules-based monetary policy and expansionary monetary policy.

Explanation

Monetary policy refers to the credit control system that is adopted by the central bank of a country with an aim to achieve its macroeconomic policy objectives. Rules-based monetary policy and expansionary monetary policy are two important types of monetary policy. Rules-based monetary policy is the policy, which is very rare or never deviate from its rules that are established in the time of introducing or announcing the policy.

On the other hand, the expansionary monetary policy is the policy which the central bank of the country is used to stimulate the economy. The tools like interest rate, open market operation, Repo, reverse Repo, and so on stabilize the economy...

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