Which of the following is the main advantage for following monetary policy rule?

Question

Quizplus · Accepted Answer

Following a monetary policy rule can help to avoid economic fluctuations that arise due to the political business cycle. This means that the central bank can stick to the rule even if there is pressure from the government or other political actors to deviate from it. This increases the credibility of the central bank and promotes greater stability in the economy. Option B is incorrect because a monetary policy rule can limit the flexibility of the central bank to respond to unexpected shocks. Option C and D are incorrect as they are not the main advantages of following a monetary policy rule.

Which of the Following Is the Main Advantage for Following