Arguments for Adopting a Policy Rule Include

question 6

Multiple Choice

Arguments for adopting a policy rule include

• A)discretion avoids the straightjacket that would lock in the wrong policy if the model that was used to derive the policy rule proved to be incorrect.
• B)discretion enables policy makers to change policy settings when an economy undergoes structural changes.
• C)discretionary policies pursue overly expansionary monetary policies to boost employment in the short run but generate higher inflation in the long run.
• D)all of the above.

---

Definitions:

Interpersonal Power

The ability of an individual to influence the behavior of others in a social context.

Reward Power

A form of power that is based on the ability to distribute rewards that others view as valuable, enabling influence over them.

Ethical Use

The responsible and morally sound use of resources, information, and authority, in a manner that is considerate to others and adheres to established norms or standards.

Legitimate Power

The authority that a person possesses as a result of their position or role within an organization or society.