Which of the Following Best Describes the Reason Why Policymakers

question 15

Multiple Choice

Which of the following best describes the reason why policymakers do not generally like to commit to following a rule for monetary policy?

• A)Because changes to the economy's structure will prevent any rule from working well for long
• B)Because rules do not effectively prevent time-inconsistency
• C)Because rules without credibility are worse than discretion
• D)Because central bankers like to feel important

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Definitions:

Dissociation

A psychological experience of disconnection from one’s thoughts, feelings, memories, or sense of identity.

Conscious Awareness

The condition of being conscious of one's own being, feelings, ideas, and environment.

Painful Memories

Recollections from the past that cause emotional distress and discomfort when remembered or recalled.

Paranoia

A mental condition characterized by irrational suspicions and mistrust of others, often without sufficient basis.