If the Monetary Policy Rule Is Given by R =

question 106

Multiple Choice

If the monetary policy rule is given by r = 1.0 + 0.5p, then 0.5 represents ________.

• A) the autonomous component of the real interest rate set by the central bank
• B) the responsiveness of the real interest rate to the inflation rate
• C) the nominal rate as described by the Taylor principle
• D) none of the above

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Definitions:

Frederick Taylor

An American mechanical engineer who sought to improve industrial efficiency and is considered the father of scientific management.

Systematic Soldiering

The deliberate and coordinated effort of workers to restrict output by limiting the speed at which they perform work. Workers engage in systematic soldiering to prevent piece rates being cut.

Taylor's Scientific Management

A theory of management that analyzes and synthesizes workflows to improve economic efficiency, especially labor productivity.

Salary Increase

An upward adjustment to an employee's remuneration, recognizing their contributions, inflation, or market adjustments.