Question: According to the Taylor rule, the central bank should decrease the short-term interest rate if inflation is _____its target, or if real GDP growth is

According to the Taylor rule, the central bank should decrease the short-term interest rate if inflation is _____its target, or if real GDP growth is ______its target.

a. above; below

b. below; above

c. above; above

d. below; below

e. None of the other answers are correct.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Comparative statement of financial position accounts of Jensen Limited, which follows IFRS, appear below: Data from Jensen's 2017 income statement follow: Additional information: 1. Equipment that...

Nominal anchors Suppose you are the chairman of the Central Bank in Gilead. The current inflation rate is 15%. Gilead has a real income growth rate of 3%. The world real interest rate is constant and...

Hi there I could some help with this one I have bolded the question. Below that are some notes and resources to provide context and resources. The explanation needs to be addressed from the attached...

3.The monetary policy instrument currently used by the Reserve Bank of Australia is: (a) The growth rate of the money supply. (b) Management of the exchange rate. (c) A short-term interest rate. (d)...

According to the Taylor rule, if there is no unemployment gap and Multiple Choice if inflation rises to 5 . 2 percent, the Fed should raises its targeted interest rate to 8 . 8 percent. All of these...

hi can i please get some help in how to write examples of real life senarios in the answered questions and can you check if i have correctly answered the question and if anything is missing....

36. (05.05 LC) In macroeconomics, "crowding out" is apt to have which effect on the economy in the long run? (1 point) An increase in the natural rate of unemployment A lower real interest rate A...

hi can you please help me how to write examples related to real life scenario to the answered of the questions? 1.Suppose the current inflation rate is higher that the target inflation rate. Would...

The central bank has a real neutral interest rate of 1.5% and the market expect inflation to be around 4% next year, which is 2% above the target set by the central bank. GDP is expected to be 0.5%...

please explain I will appreciate for better revision 22. List-I includes names of some authors and List-II some theories/ hypothesis related with these authors. Matching authors with their...

QUESTION 1 1. Under the optimal monetary policy, the central bank should let the nominal interest rate a. rise when the inflation gap rises and decline when the output gap rises. b. decline when the...

Find f(t) if F(s) is given by theexpression s(s + 1) F(s) = (s + 2)(s + 3)

On July 1st 20X0 Wisdom Pvt. Ltd. entered into a contract of lease for a new car with a commercial bank for three years. Cash price of the vehicle was Rs. 3,417,000 but the contract required a...

A friend of yours purchased $ 8 0 , 0 0 0 ( face value ) of Unitron Corporation bonds for $ 8 7 , 2 1 4 on March 2 6 , 2 0 2 3 . The bonds have an 8 % annual coupon rate and pay interest semiannually...

Copy the code provided and paste the code into the code window. The following code uses scnr . nextInt ( ) to read in a value for variable numOnions. Then, uses System.out.println ( ) to output the...