Which of the following support the idea that monetary policy should be made by a rule?...

Which of the following support the idea that monetary policy should be made by a rule?

the political business cycle and the time-inconsistency problem

the political business cycle but not the time-inconsistency problem

the time-inconsistency problem, but not the political business cycle

neither the political business cycle nor the time-inconsistency problem

Solutions

Expert Solution

c. The time inconsistency problem, but not the political business cycle.

Time inconsistency is an argument for monetary policy by rule and political business cycle is an argument against monetary policy by rule.

Rahul Sunny answered 1 year ago

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