fixed-rule policy

Popular Terms
A fiscal or monetary policy focused on achieving a specific long-term governmental goal such as maintaining a low rate of inflation. A policy that specifically addresses this goal might be one that works to maintain a low stable growth rate in money supply. A fixed rule policy does not change regardless of the condition of the economy. Economist Milton Friedman was a proponent of fixed-rule policy because he believed it tends to operate more efficiently than discretionary policies over the long-run.

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