Final answer:
Inflation targeting is not an effective rule for reducing the budget deficit, as it focuses on controlling inflation rather than directly addressing government spending or budget balance.
Step-by-step explanation:
The option that is not effective in reducing the budget deficit is d. inflation targeting. While constitutional amendments, PAYGO rules, and spending caps all directly address government budget policies to either limit spending or balance budgets, inflation targeting is a monetary policy that aims to control inflation rather than directly influence government spending or the budget deficit.
Inflation targeting is primarily concerned with maintaining price stability by setting and achieving a specified inflation rate. This strategy does not inherently reduce a budget deficit, as it does not involve measures to decrease government spending or increase taxes. Contractionary fiscal policy, on the other hand, includes measures such as cuts in government spending or increases in taxes, which can reduce a deficit.