"Inflation Targeting Rule" is a special case of a
A)Taylor Rule with zero weight on output.
B)Taylor Rule with zero weight on inflation.
C)Taylor Rule with an equal weight on output and inflation.
D)Taylor Rule with different but positive weights on output and inflation.

Question

Quizplus · Accepted Answer

Inflation targeting rule is a special case of the Taylor Rule with zero weight on output. In this rule, the central bank sets its policy interest rate to achieve a specific inflation target, usually around 2%. The Taylor rule, on the other hand, recommends the central bank to adjust the interest rate based on the deviation of both inflation and output from their respective targets.

"Inflation Targeting Rule" Is a Special Case of a