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:

FUTA Taxes

Federal unemployment taxes employers must pay, contributing to the US government's fund to support those unemployed.

Current Liability

A company's debt or obligations that are due within one year.

Recognized Revenues

This accounting concept refers to revenues that have been earned (goods or services have been delivered), and there is a reasonable certainty of collection.

Cash Currently

Liquid funds that are readily available for use in the immediate or near future.