Monetary and fiscal policy making that is carried out in response to a pre-set rule and does not respond to changes in economic activity is known as

Question

Quizplus · Accepted Answer

Nondiscretionary policy making involves following pre-set rules and targets, rather than making decisions in response to current economic circumstances. This approach is often used in the case of monetary policy, where the central bank sets interest rates based on a pre-determined inflation target, and does not deviate from this target even if economic conditions change. This approach is seen as more predictable and transparent, and helps to anchor inflation expectations.

Monetary and Fiscal Policy Making That Is Carried Out in Response