Describing the rules and discretion

Reference no: EM131833196

Question: All of the following are called "rules." Which of the following so-called rules are actually like "rules" and which are more like "discretion"? How can you tell the difference?

a. Congress passes a law providing automatic cost-of-living increases to Social Security every year.

b. Congress follows a rule to vote every few years on how much to increase Social Security payments-votes that usually occur just before an election. (This was the law before 1972.)

c. The Federal Reserve follows the famous "Taylor rule" for setting the Federal Funds rate:

Nominal rate = 2% + Inflation + 0.5 x (Real growth rate - Potential growth rate)

d. The Federal Reserve follows a rule of "doing whatever seems right at the time."

e. The police follow a rule of questioning anyone loitering outside of a bank who looks suspicious.

f. The police follow a rule of questioning anyone loitering outside of a bank who is dressed in bulky clothing that could conceal a weapon.

Reference no: EM131833196

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