Some People Believe That Monetary Policy Should Be Made by Rule

question 33

Multiple Choice

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.

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Definitions:

Coefficient of Variation

A standardized measure of dispersion of a probability distribution or frequency distribution, expressed as a percentage of the mean.

Ether

A class of organic compounds characterized by an oxygen atom connected to two alkyl or aryl groups; they are often used as solvents.

Molecule

The smallest particle of a chemical element or compound that has the chemical properties of that element or compound.

1,2-dibromoethene

A halogenated alkene with the formula C2H2Br2, characterized by having two bromine atoms attached to adjacent carbon atoms in the ethene molecule.