If a central bank follows an activist monetary policy rule,
A)full employment can always be maintained with little or no inflation
B) financial markets always need advance notice of any policy change so the central bank does not lose its credibility
C)the focus is generally on expected future economic conditions while current economic conditions are ignored
D)the focus is generally on the long-run inflation rate with little concern about unemployment
E)none of the above

Question

Quizplus · Accepted Answer

An activist monetary policy involves adjusting monetary policy based on current economic conditions, aiming to address issues like inflation and unemployment as they arise. It does not guarantee full employment with no inflation (A), does not always require advance notice to financial markets (B), considers both current and future economic conditions (C), and does not focus solely on long-run inflation with disregard for unemployment (D).

If a Central Bank Follows an Activist Monetary Policy Rule