The central bank of a country follows the Taylor rule to set its interest rate.If the equilibrium real interest rate rises by 1 percentage point, all other variables remaining unchanged,
A) the central bank should raise the nominal interest rate by 1 percentage point.
B) the central bank should lower the nominal interest rate by 1 percentage point.
C) the central bank should raise the nominal interest rate by 0.5 percentage points.
D) the central bank should lower the nominal interest rate by 0.5 percentage points.
Correct Answer:
Verified
Q27: Taylor originally picked _as the equilibrium real
Q28: The Taylor rule implies that the nominal
Q29: The Taylor rule is
A)an activist rule.
B)a nonactivist
Q30: A money-growth rule that does not respond
Q31: Suppose the economy is thought to be
Q33: If the growth rate of the money
Q34: Suppose the economy is thought to be
Q35: If the growth rate of the money
Q36: Taylor originally picked _as the weight on
Q37: A money-growth rule that responds to the
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