A Central Bank That Does NOT Follow the Taylor Principle

question 45

Multiple Choice

A central bank that does NOT follow the Taylor principle will fail to raise nominal interest rates by more than the increase in expected inflation. Therefore,higher inflation will lead to a ________ in real interest rates,resulting in ________-sloping monetary policy curves.

• A)decline;downward
• B)rise;downward
• C)rise;upward
• D)decline;upward

---

Definitions:

Granules

Small particles or grains, often referring to microscopic structures within cells that contain enzymes and other substances.

Open Circulatory System

A type of circulatory system where blood is not always contained within blood vessels but flows freely through cavities in the body, facilitating exchange of nutrients and waste with cells.

Blood Vessels

The tubes in the body through which blood flows, including arteries, veins, and capillaries, responsible for transporting oxygen, nutrients, and waste products.

Hemoglobin

This substance within red blood cells facilitates the movement of oxygen from the lungs to various body tissues and the return transport of carbon dioxide to the lungs.