the economics of money, banking, and financial markets

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5. 
   

   If the monetary policy rule is given by r=1.0 + 0.5p, then 1.0 represents ____.
   A) the autonomous component of the real interest rate set by the central bank
   B) the responsiveness of the real interest rate to the inflation rate
   C) the nominal rate as described by the Taylor principle
   D) none of the above
   Answer: A
   Diff: 2 Type: MC Page Ref: 559
   Skill: Recall
   Objective List: 23.1 Apply the IS-MP framework for the determination of aggregate output and
   the interest rate

   
   


6. 
   

   If the monetary policy rule is given by r=1.0 + 0.5p, then 0.5 represents ____.
   A) the autonomous component of the real interest rate set by the central bank
   B) the responsiveness of the real interest rate to the inflation rate
   C) the nominal rate as described by the Taylor principle
   D) none of the above
   Answer: B
   Diff: 2 Type: MC Page Ref: 559
   Skill: Recall
   Objective List: 23.1 Apply the IS-MP framework for the determination of aggregate output and
   the interest rate

   
   


7. 
   

   If the monetary policy rule is given by r=1.0 + 0.5p, then r represents ____.
   A) the autonomous component of the real interest rate set by the central bank
   B) the responsiveness of the real interest rate to the inflation rate
   C) the real interest rate that is sent by the central bank
   D) none of the above
   Answer: C
   Diff: 2 Type: MC Page Ref: 559
   Skill: Recall
   Objective List: 23.1 Apply the IS-MP framework for the determination of aggregate output and
   the interest rate

   
   


8. 
   

   Central banks aim to ____.
   A) keep inflation stable
   B) keep expected inflation equal to zero
   C) reduce inflation to zero
   D) both A and B
   Answer: A
   Diff: 2 Type: MC Page Ref: 559
   Skill: Recall
   Objective List: 23.1 Apply the IS-MP framework for the determination of aggregate output and
   the interest rate