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.

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Definitions:

Physiological

Pertaining to the functions and activities of living organisms and their parts, including all physical and chemical processes.

Safety and Security

The state of being free from danger or threat and having measures in place to protect against harm.

Maslow's Hierarchy

A theory in psychology proposed by Abraham Maslow, suggesting that people are motivated to achieve certain needs and that some needs take precedence over others, structured in a hierarchy from physiological needs to self-actualization.

Esteem

Refers to the respect, admiration, and recognition an individual receives from others, and also encompasses self-esteem, which is an individual's perception of their own worth.