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money-supply rules

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A policy in which a government or central bank commits itself in advance to certain rules governing the money supply. It is based on the belief that fiscal policy and monetary policy cannot affect the real variables in an economic situation but that uncertainty concerning government or central bank intentions can destabilize markets. In these circumstances a stable-policy rule is the best that can be achieved. See also rules versus discretion.

Subjects: Social sciencesEconomics

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