Economists Who Really Do Want to Take Discretion Away from the Fed,by

question 31

Multiple Choice

Economists who really do want to take discretion away from the Fed,by imposing rules on ________,face the problem of ________.

• A)policy instruments,the Fed requiring discretion to adhere to the rule
• B)policy instruments,slippages between instruments and target variables
• C)target variables,the Fed requiring discretion on how to achieve the rule
• D)target variables,slippages between instruments and target variables

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Definitions:

MUb/Pb

A concept from economics that compares the additional utility gained from consuming one more unit of a good (MUb) to its price (Pb), often used in optimal consumption analysis.

Maximizing Utility

The economic principle that individuals seek to achieve the highest level of satisfaction possible from their consumption of goods and services, given their income and the prices of those goods and services.

Marginal Rate

The rate at which one variable changes with respect to a minute increase in another variable, often used in the context of marginal tax rates or marginal rates of substitution in economics.

Market Basket A

A selected set of goods and services used to monitor changes in price levels over time, often for the purpose of calculating inflation.