Conducting Monetary Policy So That the Overnight Rate = π

question 4

Multiple Choice

Conducting monetary policy so that the overnight rate = π + 0.5(π - 2) + 0.5 (GDP gap) , where the overnight rate is the nominal overnight interest rate, π is the annual inflation rate, and GDP gap is the percentage shortfall of real GDP from its natural level, is an example of:

• A)an active policy rule.
• B)a passive policy rule.
• C)discretionary policy.
• D)an automatic stabilizer.

---

Definitions:

Ethical Rationalizations

Justifications made to excuse or legitimize behavior that may be morally questionable or unethical.

Safe

A secure container used for the storage of valuable objects against theft or damage.

Unethical Behaviour

Actions or practices that violate social norms, laws, or standards of conduct, often causing harm or disadvantage to others.

Questionable Behaviour

Actions or patterns of actions that raise doubts about morality, legality, or appropriateness, possibly leading to ethical or legal scrutiny.