Operating with Discretion in a Monetary Policy Sense Implies ________

question 12

Multiple Choice

Operating with discretion in a monetary policy sense implies ________.

• A) making no commitment to future actions
• B) a constant growth rate rule
• C) introducing a zero inflation rule
• D) making decisions without regulatory oversight

---

Definitions:

Efficiency

The extent to which resources are utilized optimally to achieve desired outcomes with minimum waste or effort.

Second Best

A concept in economics that suggests if all optimal conditions cannot be satisfied, the second-best option should be pursued.

Distortionary Tax

Taxes that cause people to alter their behavior in a way that distorts the allocation of resources from their most efficient uses.

Economic Choices

Decisions made by individuals, households, or firms regarding the allocation of scarce resources to satisfy needs and wants.