Because the Fed can easily provide too much or too little response to economic shocks, economists advocate
A) policy discretion.
B) policy rules.
C) no response to any shock.
D) a wait-and-see policy.

Question

Quizplus · Accepted Answer

Policy rules help to provide a clear and predictable response to economic shocks, which can prevent the Fed from overreacting or not reacting enough. This helps to promote stability and predictability in the economy, which is beneficial for businesses and households.

Because the Fed Can Easily Provide Too Much or Too