Explain how the
Explanation of Solution
In an economy, thinking of rule in terms of rule is helpful to understand the US monetary policy because it helps the private sector to form precise expectation about the future. If the central bank decreases uncertainty by following a rule, then private businesses and workers will be better able to plan for the future and which may develop an economic stability. When a rule is used, then the economic stimulation can run when compared to a favorite rule against other policy rules; by that way, one can find out which rule is the best. Rules are easy to compare with one another, while decision is hard to compare with anything. Thus, it is just wind up with high inflation and an average economy.
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Chapter 13 Solutions
Macroeconomics (Fourth Edition)
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