Arguments for adopting a policy rule include
A)the time-inconsistency problem can lead to poor economic outcomes.
B)discretionary policies pursue overly expansionary monetary policies to boost employment in the short run but generate higher inflation in the long run.
C)policy makers and politicians cannot be trusted.
D)all of the above.

Question

Quizplus · Accepted Answer

All the options listed are arguments for adopting a policy rule. A policy rule can help mitigate the time-inconsistency problem, prevent overly expansionary monetary policies that lead to higher inflation, and reduce the influence of potentially untrustworthy policymakers or politicians.

Arguments for Adopting a Policy Rule Include