Monetary policy could be enacted on which of the following bases?
I. Instrument rule
II. Fiscal- related rule.
III. Targeting rule.

Question

Quizplus · Accepted Answer

Monetary policy could be enacted on the basis of an instrument rule, which involves adjusting policy tools in response to changes in economic conditions; and a targeting rule, which involves setting a target for an economic variable, such as inflation or unemployment, and adjusting policy tools to achieve that target. Fiscal-related rule is not a basis for monetary policy. Therefore, the best choice is D - I and III.

Monetary Policy Could Be Enacted on Which of the Following