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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Definitions:

CS-US Associations

The learned associations between a conditioned stimulus (CS) and an unconditioned stimulus (US) in classical conditioning.

Biological Constraints

Biological constraints refer to the idea that genetic and anatomical structures limit the range of behaviors that organisms can physically perform.

Preparedness

The state of being ready and well-prepared for a particular situation or event.

Naturally Adaptive

This term refers to the inherent ability of organisms to adjust and suit their behavior or physiology to environmental changes for survival and reproduction.