The Taylor Principle States That Central Banks Raise Nominal Rates

question 19

Multiple Choice

The Taylor Principle states that central banks raise nominal rates by ________ than any rise in expected inflation so that real interest rates ________ when there is a rise in inflation.

• A)less;rise
• B)more;fall
• C)less;fall
• D)more;rise

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Definitions:

Normally Open Contact

A Normally Open Contact is a type of switch or relay contact that is open (disconnected) when in its default state, closing (connecting) only when activated.

Logic 0

A binary state that represents a false condition or off state in digital electronics.

Software

Programs that control the processing of data in a system, as contrasted to the physical equipment itself (hardware).

Personal Computer

A small, relatively inexpensive computer designed for individual use, capable of running general-purpose applications and accessing the internet.