Conducting monetary policy so that the nominal interest rate = 0.05,is an example of:
A) an active policy rule.
B) a passive policy rule.
C) discretionary policy.
D) an automatic stabilizer.

Question

Quizplus · Accepted Answer

Conducting monetary policy with the specific goal of achieving a particular interest rate is a passive policy rule, where the central bank follows a predetermined rule rather than making discretionary decisions. However, it is worth noting that setting a specific interest rate target may not always be feasible or effective in achieving the desired macroeconomic outcomes.

Conducting Monetary Policy So That the Nominal Interest Rate =