The simple monetary policy rule $R _ { t } - \bar { r } = \bar { m } \left( \pi _ { t } - \bar { \pi } \right)$ implies that: A) if $\pi _ { t } \bar { \pi } ,$ the Federal Reserve should lower the interest rate C) if $\pi _ { t } = \bar { \pi } ,$ the Federal Reserve should raise the interest rate D) if $\pi _ { t } = \bar { \pi } ,$ the interest rate is zero E) All of these answers are correct.

Question

The simple monetary policy rule $R _ { t } - \bar { r } = \bar { m } \left( \pi _ { t } - \bar { \pi } \right)$ implies that:
A) if $\pi _ { t } < \bar { \pi } ,$ the Federal Reserve should lower the interest rate
B) if $\pi _ { t} > \bar { \pi } ,$ the Federal Reserve should lower the interest rate
C) if $\pi _ { t } = \bar { \pi } ,$ the Federal Reserve should raise the interest rate
D) if $\pi _ { t } = \bar { \pi } ,$ the interest rate is zero
E) All of these answers are correct.

Quizplus · Accepted Answer

The Answer of The simple monetary policy rule $R _ { t } - \bar { r } = \bar { m } \left( \pi _ { t } - \bar { \pi } \right)$ implies that:
A) if $\pi _ { t } < \bar { \pi } ,$ the Federal Reserve should lower the interest rate
B) if $\pi _ { t} > \bar { \pi } ,$ the Federal Reserve should lower the interest rate
C) if $\pi _ { t } = \bar { \pi } ,$ the Federal Reserve should raise the interest rate
D) if $\pi _ { t } = \bar { \pi } ,$ the interest rate is zero
E) All of these answers are correct.

The Simple Monetary Policy Rule Rt−rˉ=mˉ(πt−πˉ)R _ { t } - \bar { r } = \bar { m } \left( \pi _ { t } - \bar { \pi } \right)Rt​−rˉ=mˉ(πt​−πˉ)

The Simple Monetary Policy Rule $R _ { t } - \bar { r } = \bar { m } \left( \pi _ { t } - \bar { \pi } \right)$