If the Monetary Policy Rule Is Given by R =

question 106

Multiple Choice

If the monetary policy rule is given by r = 1.0 + 0.5p, then 0.5 represents ________.

• A) the autonomous component of the real interest rate set by the central bank
• B) the responsiveness of the real interest rate to the inflation rate
• C) the nominal rate as described by the Taylor principle
• D) none of the above

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Definitions:

Consignor

An entity or person that sends goods to another, the consignee, who agrees to sell those goods on behalf of the consignor.