Which of the Following Describes the Difference Between the Taylor

question 175

Multiple Choice

Which of the following describes the difference between the Taylor rule and inflation targeting?

• A)The Federal Reserve uses inflation targeting, and the Bank of England uses the Taylor rule.
• B)The Taylor rule responds to past inflation, and inflation targeting is based on a forecast of inflation.
• C)Inflation targeting responds to past inflation, and the Taylor rule is based on a forecast of inflation.
• D)Inflation targeting is used in conducting fiscal policy, while the Taylor rule is used in monetary policy.

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Definitions:

Carrying Value

The amount an asset is valued at on a balance sheet, subtracting depreciation and amortization.

Value Recovers

The process by which the market value of an asset increases after a period of decline.

Double Declining Balance

A method of accelerated depreciation which doubles the straight-line depreciation rate, resulting in higher depreciation expenses in the early years of an asset's life.

Depreciation Rate

The rate at which an asset's value is reduced over time for accounting and tax purposes.