Discretionary monetary policy is when the monetary authority:
A)does not commit to future monetary actions.
B)commits to future monetary actions.
C)never produces a monetary surprise to households.
D)always behaves in a predictable way.

Question

Quizplus · Accepted Answer

Discretionary monetary policy means that the monetary authority has the discretion to change its monetary policy as it deems necessary. Therefore, it does not commit to future monetary actions, which means that it may or may not produce a monetary surprise to households. Additionally, discretionary monetary policy does not necessarily mean that the monetary authority always behaves predictably, as it may change its approach depending on the economic environment.

Discretionary Monetary Policy Is When the Monetary Authority