Conducting Monetary Policy So That the Nominal Interest Rate = $\pi$

question 78

Multiple Choice

Conducting monetary policy so that the nominal interest rate = $\pi$ + 0.5( $\pi$ - 2) + 0.5(GDP gap) ,where $\pi$ is the annual inflation rate and GDP gap is the percentage shortfall of real GDP from its natural level,is an example of:

• A) an active policy rule.
• B) a passive policy rule.
• C) discretionary policy.
• D) an automatic stabilizer.

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Definitions:

Respiratory Acidosis

A medical condition characterized by a decrease in the pH of the blood due to an accumulation of carbon dioxide, typically resulting from inadequate ventilation.

Arterial Blood

Blood found in the arteries that is bright red due to its high oxygen content, circulating from the heart to various parts of the body.

Bicarbonate

An alkaline, bicarbonate ion (HCO3-) that acts as a buffer to maintain the pH balance in bodily fluids, particularly blood.

Intravascular Space

The inside area of blood vessels through which blood circulates within the body.