In Implementing Monetary Policy with Respect to the Taylor Rule

question 92

Multiple Choice

In implementing monetary policy with respect to the Taylor Rule:

• A)the central bank is willing to tolerate a 2 percent target rate of inflation, and that the central bank should follow three rules when setting its target for the overnight lending rate.
• B)the central bank is willing to tolerate a 5 percent target rate of inflation, and that the central bank should follow three rules when setting its target for the overnight lending rate.
• C)the central bank is willing to tolerate any inflation rate, and overnight lending rate.
• D)the central bank chooses an inflation target regardless of the economic situation.