In Implementing Monetary Policy with Respect to the Taylor Rule

question 92

Multiple Choice

In implementing monetary policy with respect to the Taylor Rule:

• A)the central bank is willing to tolerate a 2 percent target rate of inflation, and that the central bank should follow three rules when setting its target for the overnight lending rate.
• B)the central bank is willing to tolerate a 5 percent target rate of inflation, and that the central bank should follow three rules when setting its target for the overnight lending rate.
• C)the central bank is willing to tolerate any inflation rate, and overnight lending rate.
• D)the central bank chooses an inflation target regardless of the economic situation.

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Definitions:

Validating

The process of recognizing and affirming the validity or worth of an individual or a concept.

Wording Effects

The impact that the phrasing of questions or statements has on people's responses or perceptions, often studied in survey research and psychology.

Response Bias

The tendency of respondents to answer questions on a survey untruthfully or misleadingly.

Researcher Bias

The tendency for the preferences, beliefs, or prejudices of a researcher to influence the outcomes of their research.