A policy rule:
A) must specify money growth at a constant rate.
B) must specify an active policy.
C) must specify a passive policy.
D) may specify either an active or a passive policy.

Question

Quizplus · Accepted Answer

A policy rule can specify either an active or passive approach to monetary policy. An active policy involves using discretion to respond to changes in economic conditions, while a passive policy involves following a predetermined set of rules. The rule itself could specify a variety of targets or indicators, not just a constant rate of money growth.

A Policy Rule