A Clear-Cut "Rules Versus Discretion" Debate Is No Longer Possible

question 73

Multiple Choice

A clear-cut "rules versus discretion" debate is no longer possible because those economists advocating rules for ________,such as ________,must leave the Fed with plenty of discretionary power.

• A)policy instruments,the money supply
• B)policy instruments,the inflation rate
• C)target variables,the money supply
• D)target variables,the inflation rate

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Definitions:

Demand Equation

A mathematical expression that describes the relationship between the quantity demanded of a good and its price, along with other factors like income and price of related goods.

Supply Equation

A mathematical expression that describes the relationship between the quantity of a good supplied by producers and the good's price.

Price Floor

A legally imposed minimum price below which a good or service cannot be sold, typically above the equilibrium price, leading to surpluses.

Shortage/Surplus

A market condition where the quantity of a good or service supplied is not equal to the quantity demanded; shortages occur when demand exceeds supply, and surpluses occur when supply exceeds demand.