In the simple monetary policy rule
,
Represents:
A)the marginal product of capital.
B)how sensitive monetary policy is to changes in inflation.
C)the deviation of the inflation rate from the target rate.
D)the target rate of inflation.
E)none of the above

Question

In the simple monetary policy rule 
, 
Represents:
A)the marginal product of capital. 
B)how sensitive monetary policy is to changes in inflation. 
C)the deviation of the inflation rate from the target rate. 
D)the target rate of inflation. 
E)none of the above

Quizplus · Accepted Answer

In the simple monetary policy rule, "π-π*" represents the deviation of the inflation rate from the target rate.

In the Simple Monetary Policy Rule