A ________ policy rule specifies how the central bank adjusts _____________ in response to changes in particular economic variables.

Question

Quizplus · Accepted Answer

A monetary policy rule, such as the Taylor rule, typically describes how a central bank like the Federal Reserve adjusts interest rates in response to changes in economic conditions like inflation or the output gap. Fiscal policy, which involves government spending and taxation, is not directly related to central bank operations.

A ________ Policy Rule Specifies How the Central Bank Adjusts