According to the Taylor Rule, When Real GDP Is Below

question 59

Multiple Choice

According to the Taylor rule, when real GDP is below its natural level, the overnight rate should be _____, and when inflation exceeds 2 percent, the overnight rate should be _____.

• A)raised; raised
• B)raised; lowered
• C)lowered; raised
• D)lowered; lowered

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Definitions:

Flexibility

The ability to adapt to new, different, or changing requirements and situations with ease.

Reactiveness

The quality of responding to external stimuli or changes in the environment, typically characterized by adaptability or sensitivity.

Satisfactoriness

The condition or quality of meeting expectations or requirements; adequacy in performance or outcome.

Correspondence

The agreement or similarity between two things, or the process of matching, communicating, or equating them.