One of the Potential Difficulties in Following a Rules-Based Approach

question 86

Multiple Choice

One of the potential difficulties in following a rules-based approach to monetary policy is:

• A) that interest rates will be stable.
• B) that the relationship between the money supply and inflation can be weak in the short run.
• C) that the velocity of money is fully predictable.
• D) that the policy outcome is desirable.

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