An economy is in short run equilibrium. The demand for private consumption increased and as a result there is an increase in the national product. Mainting the monetary policy according to the Taylor rule implies an increase in the interest rate and the central bank informed the proper increase. After a while it was found that the interest rate remained unchanged. What can the central bank do in order to change the interest rate as planned?

Answer rating: 100% (QA)

If the central bank intends to change the interest rate as planned but it remains unchanged there are several actions it can take to influence and adj... View the full answer