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In macroeconomics, discretionary policy is an economic policy based on the ad hoc judgment of policymakers as opposed to policy set by predetermined rules. For instance, a central banker could make decisions on interest rates on a case-by-case basis instead of allowing a set rule, such as Friedman's k-percent rule, an inflation target following the Taylor rule, or a nominal income target to ...
The Fed's interest rate cuts could benefit your finances -- or hurt them. Read on to see why.
A discretionary policy is supported because it allows policymakers to respond quickly to events. However, discretionary policy can be subject to dynamic inconsistency: a government may say it intends to raise interest rates indefinitely to bring inflation under control, but then relax its stance later. This makes policy non-credible and ...
The interest rate on a high-yield savings account is variable, meaning it can increase or decrease with market conditions, much like a traditional savings account. And while the Federal Reserve ...
The United States federal budget is divided into three categories: mandatory spending, discretionary spending, and interest on debt. Also known as entitlement spending, in US fiscal policy, mandatory spending is government spending on certain programs that are required by law. [1]
Here’s a look at the pros and cons of bond funds in a lower interest rate environment. Pros Rise in bond prices: When rates fall, the prices of bonds held by the bond fund go up.
The inflation rate was high and increasing, while interest rates were kept low. [6] Since the mid-1970s monetary targets have been used in many countries as a means to target inflation. [7] However, in the 2000s the actual interest rate in advanced economies, notably in the US, was kept below the value suggested by the Taylor rule. [8]
The rule in bonds is that when interest rates rise, bond prices fall. So, let’s say you paid $2,000 for a 10-year bond with a 3 percent interest rate. So, let’s say you paid $2,000 for a 10 ...