If the Taylor Principle Is Not Followed and Nominal Interest

question 18

Multiple Choice

If the Taylor Principle is not followed and nominal interest rates are increased by less than the increase in the inflation rate,then real interest rates will ________ and monetary policy will be too ________.

• A)rise;tight
• B)rise;loose
• C)fall;tight
• D)fall;loose

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Definitions:

European Union

A political and economic union of 27 European countries that are tied by a common market and numerous regulatory measures.

Ethnoculturalism

The advocacy or emphasis on the distinct characteristics and significance of a particular ethnicity or culture within a society.

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The presence or support for the coexistence of diverse cultures, including racial, religious, or cultural groups within a society.

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Social groups that share a common and distinctive culture, religion, language, or the like.