A Practical Limitation of Using the Taylor Rule for Setting

question 32

Multiple Choice

A practical limitation of using the Taylor rule for setting the target federal funds rate would be that it:

• A)Makes monetary policy less transparent
• B)Makes monetary policymakers less accountable
• C)Requires better real-time data than is available
• D)Is difficult to calculate the target from the formula

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Definitions:

Performance

The execution, accomplishment, or fulfillment of a promise, contract, or other obligation.

Revocation

The act of withdrawing, canceling, or repealing a statement, offer, or privilege, which can pertain to legal contracts, licenses, or wills.

Acceptance

In contract law, the agreement by a party to the terms of an offer, forming a contract.

Capacity

In legal terms, the ability to understand the nature and effects of one's actions, specifically in forming contracts or executing wills.