Some people believe that monetary policy should be made by rule rather than by discretion.One of their beliefs is that
A)setting a policy rule will limit the abuse of power of policymakers.
B)policymakers 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.

Question

Quizplus · Accepted Answer

Setting a policy rule can limit the abuse of power of policymakers by providing a framework and guidelines that they must follow, rather than making ad hoc decisions based on their own biases or interests. This can increase transparency and accountability in the decision-making process.

Some People Believe That Monetary Policy Should Be Made by Rule