A rules-based monetary policy
A) is advocated by activists.
B) is advocated by nonactivists.
C) could involve a predetermined steady growth rate in the money supply.
D) b and c
E) all of the above

Question

Quizplus · Accepted Answer

A rules-based monetary policy is typically advocated by nonactivists, who believe that monetary policy should be based on predetermined rules rather than discretionary decision-making by the central bank. One example of a rule-based policy is targeting a steady growth rate in the money supply. Therefore, the correct answer is D, which includes both options B and C. Option A is incorrect, as activists are more likely to advocate for discretionary policy approaches that allow for more flexibility in response to economic conditions.

A Rules-Based Monetary Policy