Why Should Monetary Policy Be Made by Rule Rather Than

question 9

Multiple Choice

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

• A)because the economy is subject to a variety of random shocks
• B)because monetary policymakers are now allowed undisciplined discretion
• C)because it is not clear how important political business cycles have been in the past
• D)because central banks can achieve credibility over time by backing up their words with deeds

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Definitions:

Private Corporations

Companies that do not offer or trade their company stock (shares) to the general public on the stock market but rather the stock is offered, owned, and traded or exchanged privately.

Closely Held

A company that has a limited number of shareholders and whose stocks are not publicly traded.

Publicly Held

Describes a company whose shares are traded openly on stock exchanges, allowing members of the general public to buy and sell shares.

Corporate Bylaws

The rules and procedures established by a corporation to govern its operations and management.