Why Are Policymakers Willing to Use Rules for Monetary Policy

question 62

Essay

Why are policymakers willing to use rules for monetary policy as general guides, but unlikely to follow such rules blindly?

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Definitions:

Market Rate

The current price or cost of goods, services, or commodities as determined by the market supply and demand.

Maturity

The date on which a financial obligation must be repaid in full or the point at which an investment reaches its full value.

Time Period

A specific duration for which financial or operational activities are measured, analyzed, and reported.

Lessee

An entity or individual that leases or rents property or equipment from another.