One often-cited rationale for a fixed-growth-rate monetary policy is that
A)it is too expensive to pay a staff to continually make adjustments in policy
B)although it's possible to determine what's happening in the economy,it's not possible to determine what to do about it
C)it is not possible to determine with any certainty what's happening in the economy,so it's easy to make a mistake with active policy
D)we know that the economy is increasing at a fixed rate year after year,so a fixed rate of growth in the money supply is justified
E)then the Federal Reserve would be superfluous and we could eliminate one large bureaucracy

Question

Quizplus · Accepted Answer

The rationale for a fixed-growth-rate monetary policy is that it is not possible to determine with any certainty what's happening in the economy, so it's easy to make a mistake with active policy. By having a fixed growth rate, policymakers can avoid making mistakes and minimize the risk of causing economic instability. The other options are either untrue or irrelevant.

One Often-Cited Rationale for a Fixed-Growth-Rate Monetary Policy Is That