The slope of the monetary policy rule line when the nominal interest rate is measured on the vertical axis is
A)less than 1.
B)zero.
C)greater than 1.
D)equal to 1.
E)equal to -1.

Question

Quizplus · Accepted Answer

The slope of the monetary policy rule line, often associated with the Taylor rule in economics, is typically greater than 1. This reflects the central bank's response to inflation: for every one percentage point increase in inflation, the central bank raises the nominal interest rate by more than one percentage point to stabilize the economy.

The Slope of the Monetary Policy Rule Line When the Nominal