Should monetary policy be made by rule rather than by discretion? Between January 2001 and July 2003, the Fede

Question

Should monetary policy be made by rule rather than by discretion? Between January 2001 and July 2003, the Federal Reserve lowered its target for the Federal Funds rate 13 times. The target fell from 6% to 1%. Federal Reserve Chairman Alan Greenspan uses a variety of information to determine whether the Federal Reserve should act. Although most observers credit the Federal Reserve for the longest economic expansion in U.S. history, others believe that the Federal Reserve was too slow to act when the U.S. economy started slumping in 2000.

This question addresses the issue of whether monetary policy should be made by discretionary policy or implemented according to a set of rules.

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. I and III

B. I only

C. I and II

D. I, II, and III

E. III only

F. II and III

G. II only

Answer 1

One rule only

Fed: don't manipulate money supply or interest rates.  

for ever action there is an equal and opposite reaction.

IOW your misguided attempts to make this better only

result in the c**p hitting the fan later, and worse.

Answer 2

The Fed is a tool of the elite (a tool the founding father's warned against) to control the masses. Your money backed by nothing, and is all borrowed. Every dollar in the US has intrest paid on it. The gov is't about to give up on a great tool for controlling the people.

Sorry I couldn't be more help with your homework and answer the actual question.