Which of the Following Support the Idea That Monetary Policy

question 2

Multiple Choice

Which of the following support the idea that monetary policy should be made by a rule?

• A)the political business cycle and the time-inconsistency problem
• B)the political business cycle but not the time-inconsistency problem
• C)the time-inconsistency problem,but not the political business cycle
• D)neither the political business cycle nor the time-inconsistency problem

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Definitions:

Premium

The amount by which the price of a financial instrument or commodity exceeds its principal or face value, or the amount paid for an insurance policy.

Coupon Rate

The yearly rate of interest that the entity issuing a bond pays to its investors, typically shown as a portion of the bond's nominal value in percentage terms.

Ask Price

The ask price is the lowest price a seller is willing to accept for a security, commodity, or currency in financial markets.

Face Value

The nominal value printed on a bond, note, or financial document, representing its worth at maturity or when redeemed.