Question

Which of the following approaches should the Fed use if it experiences large lags and mistakes in monetary policy?

a. Discretionary policy
b. An eclectic approach
c. Fixed rules
d. Fiscal policy

Answer 1

C. Fixed rules.

Step-by-step explanation:

This is simply a policy that is seen to be a monetary or in some cases fiscal; they are said to be automated in most of its cases and are based on the criteria that are predetermined.

In most cases, these policies are seen to be binding and also categorically constrain officials' policy choices based on certain predetermined criteria to direct them toward serving the public interest.

Many cases by policymakers made this policy to be put in place because most of them generally cannot bind their own future choices, also fixed policy rules usually have to be enforced by some kind of higher authority in order to be binding etc.