Is the answer D, please help.?

Question

This question addresses the issue of whether monetary policy should be made by discretion or rule.

2.2. Which of the following statements is an argument in favor of discretionary monetary policy?

I. Monetary rules reduce the flexibility of the Federal Reserve.

II. The Federal Reserve may use monetary policy to affect the outcome of elections.

III. Monetary rules may lead to a lower sacrifice ratio, because the public is more confident that the Federal Reserve will keep inflation low.

A. II only

B. III only

C. I and III

D. I only

E. II and III

F. I and II

G. I, II, and III

Answer 1

D is the right answer, because if FED can set policy discretionary then economic agents cant anticipate the monetary steps by the FED and with that monetary policy is more effective in the short run.