The Fed followed a precommitment policy when it promised to keep short-term interest rates low for a period of time after the 2008/09 U.S. recession.

Question

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The Fed's promise to keep short-term interest rates low for a period of time after the 2008/09 U.S. recession is an example of a precommitment policy, as it involved committing in advance to a future course of monetary policy to influence expectations and economic behavior.

The Fed Followed a Precommitment Policy When It Promised to Keep