Which terms in the equation for Taylor rule can be influenced by the government through monetary policy?
A)Inflation gap and interest-rate spread
B)Unemployment gap and interest-rate spread
C)Interest-rate spread and unemployment gap
D)Output gap and inflation gap

Question

Quizplus · Accepted Answer

The Taylor rule includes terms for the output gap and the inflation gap, both of which can be influenced by the government through monetary policy. The output gap reflects the difference between actual and potential economic output, and the inflation gap measures the difference between actual and target inflation rates.

Which Terms in the Equation for Taylor Rule Can Be