Author Question: How are rule-based policies similar to adaptive expectations? What will be an ideal ... (Read 77 times)

Yi-Chen · **on:** Jun 30, 2018

How are rule-based policies similar to adaptive expectations?

What will be an ideal response?

Question 2

AIG almost went bankrupt in 2008 because

A) the value of the securities underlying its credit default swaps declined significantly.
B) it lacked the collateral required by buyers of its credit default swaps.
C) prices of securities underlying their credit default swaps were hard to determine since they were no longer actively traded.
D) all of the above.

k.lashomb · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

Rule-based policies are tied to past information and understandings. They embody the wisdom and limitations of the past. Rules are immune to new information and judgment. Rule-based policies are immune to short-sighted influences, fads, and conceptual breakthroughs.

Answer to Question 2

D