Policy is conducted by rule if policymakers:
A) announce in advance how policy will respond to various situations and commit themselves to following through on this announcement.
B) are free to size up the situation case by case and choose whatever policy seems appropriate at the time.
C) set policy according to election results, i.e., set policy by rule of the ballot box.
D) manipulate policy to ensure both low inflation and unemployment on election day.

Question

Quizplus · Accepted Answer

If policymakers announce in advance how policy will respond to various situations and commit themselves to following through on this announcement, they are conducting policy by rule. This approach provides clarity and transparency to the public and markets, allowing them to adjust their expectations accordingly. This is in contrast to policymakers making decisions case by case or manipulating policy for short-term electoral gains.

Policy Is Conducted by Rule If Policymakers