According to the Taylor Rule

question 59

Multiple Choice

According to the Taylor rule:

• A) if inflation is equal to target inflation, the central bank should set the real interest rate equal to zero.
• B) if inflation is equal to target inflation, the central bank should set the nominal interest equal to its short- run value.
• C) the central bank should not care about the unemployment rate.
• D) if inflation is equal to target inflation, the central bank should set the real interest rate equal to its medium- run value.
• E) if inflation is equal to target inflation, the central bank should set the nominal interest rate equal to its medium- run value.

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Definitions:

Electroscope

A device used to determine whether an object contains a positive or negative charge.

Polarity

The characteristics of a device that exhibits opposite quantities within itself: positive and negative.

Electrostatic Charge

A stationary electric charge built up on the surface of a material, typically caused by contact or friction.

Lightning Arrestor

A protective device that diverts surge voltages from lightning strikes away from electronic equipment or electrical installations, minimizing damage.