The Taylor Rule Specifies That the Bank of Canada Should

question 37

Multiple Choice

The Taylor rule specifies that the Bank of Canada should increase the overnight rate as inflation _____ and the GDP gap _____.

• A)increases; increases
• B)increases; decreases
• C)decreases; increases
• D)decreases; decreases

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Definitions:

Effort

The amount of physical or mental energy expended to achieve a goal or perform a task.

Expectancy-value Theory

A psychological theory that explains motivation and behavior as a function of an individual's expectations for success and the value they place on achieving the goal.

Achievable

A term used to describe a goal or task that is possible to accomplish or attain with effort, skill, or resources.

Self-awareness

The recognition of one's own emotions, thoughts, and values, and understanding how they influence behavior.