The parameter r_r in the Taylor rule equation tells how much the central bank changes A) the money supply in reaction to a gap between the actual and target inflation rates. B) the exchange rate in reaction to a gap between the actual and target inflation rates. C) the real interest rate in reaction to a gap between the actual and target inflation rates. D) the unemployment rate in reaction to a gap between the actual and target inflation rates.

Question

Quizplus · Accepted Answer

The Taylor rule equation includes a parameter that indicates how much the central bank adjusts the real interest rate in response to deviations between the actual inflation rate and the target inflation rate.

The Parameter Rr in the Taylor Rule Equation Tells How

The Parameter R_r in the Taylor Rule Equation Tells How