According to the Taylor Principle,when the Inflation Rate Rises,the Nominal

question 116

Multiple Choice

According to the Taylor Principle,when the inflation rate rises,the nominal interest rate should be ________ by ________ than the inflation rate increase.

• A)increased;more
• B)increased;less
• C)decreased;more
• D)decreased;less

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Definitions:

Taxes on Earnings

These are financial charges imposed by governments on individuals or entities based on their income or profits.

Fiscal Policy

Fiscal policy involves government spending and taxation decisions aimed at influencing economic conditions, such as stimulating economic growth, controlling inflation, and reducing unemployment.

Aggregate Supply Curve

A graphical representation showing the relationship between the total quantity of goods and services that producers in an economy are willing to supply at varying price levels.

Discretionary Fiscal Policy

Economic policies based on government spending and taxation decisions that are used to influence macroeconomic conditions, including aggregate demand, employment, and inflation.