Arguments for discretionary policies include
A)policy rules can be too rigid because they cannot foresee every contingency.
B)policy rules do not easily incorporate the use of judgment.
C)discretion avoids the straightjacket that would lock in the wrong policy if the model that was used to derive the policy rule proved to be incorrect.
D)discretion enables policy makers to change policy settings when an economy undergoes structural changes.
E)all of the above.

Question

Quizplus · Accepted Answer

All of the above arguments are valid reasoning for discretionary policies. Discretionary policies allow for flexibility and adaptability in response to changing economic conditions, and the use of judgment by policymakers can be beneficial in situations where policy rules do not capture all the nuances of the economy. Additionally, discretionary policies can be necessary in the case that policy rules become outdated or prove to be incorrect in their predictions.

Arguments for Discretionary Policies Include