Fixed-Rule Policy


DEFINITION of 'Fixed-Rule Policy'

A fiscal or monetary policy designed to be an economic goal or target of a government. A fixed-rule policy, by definition, is pursued no matter the condition of the economy, and is considered independent of the current economic state.

BREAKING DOWN 'Fixed-Rule Policy'

For example, a fixed-rule policy of any government could be that the maximum target level of inflation must be less then 5% for any given year, as measured by the consumer price index (CPI). By creating a fixed-rule policy, a government can focus on longer term goals for an economy, and provide economic direction.

  1. Monetary Policy

    Monetary policy is the actions of a central bank, currency board ...
  2. Inflation

    The rate at which the general level of prices for goods and services ...
  3. Fiscal Policy

    Government spending policies that influence macroeconomic conditions. ...
  4. Consumer Price Index - CPI

    A measure that examines the weighted average of prices of a basket ...
  5. Economics

    A social science that studies how individuals, governments, firms ...
  6. Economy

    The large set of inter-related economic production and consumption ...
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