552 $
© 2014 Pearson Canada Inc.$18.7 Tactics: The Taylor Rule
According to the Taylor rule, the Bank of Canada should raise the overnight interest rate when
inflation ____ the Bank of Canada's inflation target or when real GDP ____ the Bank
of Canada's output target.
A) rises above; drops below
B) drops below; drops below
C) rises above; rises above
D) drops below; rises above
Answer: C
Diff: 2 Type: MC Page Ref: 457
Skill: Recall
Objective List: 18.1 Assess the different types of monetary policy strategy
According to the Taylor rule, the overnight interest rate should be set at ____.
A) π + ior - 0.5(π - π) - 0.5(y - y)
B) π + ior + 0.5(π - π) + 0.5(y - y)
C) r + π
D) r - π
Answer: B
Diff: 1 Type: MC Page Ref: 457
Skill: Recall
Objective List: 18.1 Assess the different types of monetary policy strategy
- According to the Taylor rule, the overnight interest rate should be set at ____.
A) π + ior - 0.5(π - π) - 0.5(y - y)
B) π - ior - 0.5(π - π) - 0.5(y - y)
C) r + π
D) r - π
E) none of the above
Answer: E
Diff: 1 Type: MC Page Ref: 457
Skill: Recall
Objective List: 18.1 Assess the different types of monetary policy strategy