Arguments for Adopting a Policy Rule Include

question 8

Multiple Choice

Arguments for adopting a policy rule include

• A)the time-inconsistency problem can lead to poor economic outcomes.
• B)discretionary policies pursue overly expansionary monetary policies to boost employment in the short run but generate higher inflation in the long run.
• C)policy makers and politicians cannot be trusted.
• D)all of the above.

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Definitions:

Investment Charges

Fees and expenses associated with investing in various types of investment vehicles, like mutual funds or stocks.

Public Saving

The difference between a government's total revenue and its total expenditures, reflecting the surplus or deficit in the public sector's budget.

Private Saving

Private saving is the portion of households' and businesses' income that is not spent on consumption or paying taxes, and is instead saved for future use.

National Saving

The total saving of an economy, consisting of both private saving (by households and businesses) and public saving (government surplus).