According to the Taylor rule, the Bank of Canada should raise the overnight interest rate when inflation ________ the Bank of Canada's inflation target or when real GDP ________ the Bank of Canada's output target.

Question

Quizplus · Accepted Answer

The Taylor rule suggests that the central bank should raise interest rates when inflation is above the target or when real GDP is above the output target to prevent the economy from overheating.

According to the Taylor Rule, the Bank of Canada Should