Discretionary monetary policy has the drawback that it
A) must lead to very high inflation.
B) is currently illegal in the United States.
C) cannot be implemented using changes in the federal funds rate.
D) makes inflation expectations harder to manage.
E) None of the above answers are correct.

Question

Quizplus · Accepted Answer

Discretionary monetary policy requires subjective decisions by policymakers, making it difficult to manage inflation expectations. This can lead to volatile economic conditions as investors and consumers are uncertain about future policy actions.

Discretionary Monetary Policy Has the Drawback That It