The Taylor Rule Is Most Suitable to Study the Behaviour

question 68

Multiple Choice

The Taylor rule is most suitable to study the behaviour of a central bank with the dual mandate of

• A) stable exchange rates and price stability.
• B) price stability and maximum sustainable employment.
• C) financial market stability and stable exchange rates.
• D) maximum sustainable employment and financial market stability.

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Definitions:

Equal Payments

Regular and identical payments made over a specified period, often found in loan agreements or installment plans.

Present Value

The current value of a future amount of money or stream of cash flows given a specified rate of return.

Ordinary Annuity

A series of equal payments made at regular intervals, such as monthly or annually, over a specified period.

Annuity Due

An annuity payment arrangement where payments are made at the beginning of each period, as opposed to the end, which is the case with an ordinary annuity.