One reason for preferring a rule for monetary policy is that a rule
a. allows for additional discretionary policy.
b. ensures that the economy would have a negative rate of inflation.
c. ensures that the economy would have a positive rate of inflation.
d. improves the credibility of the monetary authority.
Answer: d. improves the credibility of the monetary authority.
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In the United States since 1970, the quantity of M1 money people hold as a percentage of GDP has
A) decreased. B) remained constant. C) decreased at first and then increased. D) increased at first and the decreased. E) increased.
A bank has reserves of $50, deposits of $100, loans of $20, and government securities of $30. Assume the desired reserve ratio is 20 percent
a. What are the bank's assets and what are its liabilities? b. How much does the bank have in excess reserves? c. What can the bank do with its excess reserves that will affect the quantity of money?
The contagion that spread to South Korea, Indonesia, and other countries during the Asian financial crisis was:
A. speculative attacks forcing them to abandon their fixed exchange rates. B. competitive devaluation that led to plummeting exchange rates for all. C. competitive revaluation that led to severe overvaluation and collapse for all but South Korea. D. a result of employing a fixed exchange rate by China.
In contrast to richer countries, most residents of poorer nations will have
a. only some primary education. b. primary and secondary education. c. higher education. d. higher levels of productivity.