Macro: Discretionary Policy

In macroeconomicsdiscretionary 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 the Taylor rule or Friedman’s k-percent rule, to determine interest rates or the money supply. In practice most policy actions are discretionary in nature.
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