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:

Consistency

The degree to which a person's behaviors, attitudes, emotions, or values are stable and uniform over time.

Honest Behaviors

Actions that are characterized by truthfulness, integrity, and straightforwardness, devoid of deceit or fraud.

Correlation

The tendency of two variables to change together. If one goes up as the other goes up, the correlation is positive; if one goes up as the other goes down, the correlation is negative.

Weak Situation

Circumstances where social norms and expectations are not clearly defined, allowing for a greater variability in behavior.