Imposing policy rules
A)reduces the risk that policy makers will react to disturbances in unpredictable ways
B)appeals to economists who assume the economy is very unstable
C)always implies that the growth rate of money supply has to be kept constant
D)only works if there is a large tradeoff between unemployment and inflation
E)all of the above

Question

Quizplus · Accepted Answer

Imposing policy rules helps to reduce the risk of unpredictable reactions to disturbances, which can provide stability to the economy. This doesn't necessarily imply that growth rate of the money supply has to be constant or that there is a significant tradeoff between unemployment and inflation. The statement in option B is not entirely accurate, as economists don't assume the economy is always unstable.

Imposing Policy Rules