Why Should Monetary Policy Be Made by Rule Rather Than

question 75

Multiple Choice

Why should monetary policy be made by rule rather than discretion?

• A)because there is a clear consensus among economists about what a good monetary policy rule would be
• B)because rules would eliminate the political business cycle
• C)because rules respond to any random shocks in the economy
• D)because rules create time inconsistency

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Definitions:

Critical Path

The computed longest time path(s) through a network.

Project Crashing

A project management technique that involves reducing the project duration by adding resources to critical path activities, often at increased costs.

Gantt Charts

Planning charts used to schedule resources and allocate time.

Timeline

A representation of a sequence of events in chronological order.