The text defines the monetary policy rule as the systematic response of the real interest rate to the
A)exchange rate as decided by the Treasury.
B)rate of inflation as decided by the central bank.
C)rate of inflation as decided by the Treasury.
D)exchange rate as decided by the central bank.
E)exchange rate as decided by the banking system.

Question

Quizplus · Accepted Answer

The monetary policy rule is defined as the systematic response of the real interest rate to the rate of inflation as decided by the central bank. This means that the central bank adjusts the real interest rate in response to changes in inflation in order to achieve its monetary policy objectives, such as price stability or economic growth. The exchange rate may also be a factor in the central bank's decision-making process, but it is not the primary driver of the monetary policy rule.

The Text Defines the Monetary Policy Rule as the Systematic