Monetary policy rules are risky because I. the severity and nature of economic fluctuations are unpredictable. II. Fed Chairs have counseled against the use of rules to influence the economy. III. unexpected shocks may occur that require emergency action by the Fed.
A) I only
B) I and III only
C) II and III only
D) I, II, and III

Question

Quizplus · Accepted Answer

Monetary policy rules are risky because unexpected shocks may occur that require emergency action by the Fed and the severity and nature of economic fluctuations are unpredictable. While some Fed Chairs have cautioned against overreliance on rules, this is not a universal opinion among policymakers.

Monetary Policy Rules Are Risky Because I