If the Fed sets a target rate of inflation below 4 percent, it is an example of the Fed using
A) a monetary policy rule.
B) discretion.
C) unofficial influence.
D) the bully pulpit.

Question

Quizplus · Accepted Answer

Setting a target rate of inflation is an example of the Fed using a monetary policy rule, which is a systematic approach to setting and adjusting monetary policy based on a specific target or set of goals. This is different from discretion, which refers to the Fed's ability to make ad-hoc decisions based on current economic conditions. Unofficial influence and the bully pulpit are not relevant in this context.

If the Fed Sets a Target Rate of Inflation Below