The Taylor Rule would be implemented by a central bank using
A) changes in the reserve requirement.
B) discount lending.
C) open market operations.
D) all of the above.

Question

Quizplus · Accepted Answer

The Taylor Rule is a monetary policy guideline that suggests how central banks should adjust interest rates in response to changes in economic conditions, particularly inflation and the output gap. Open market operations, which involve the buying and selling of government securities, are the primary tool for adjusting interest rates according to the Taylor Rule. Changes in the reserve requirement and discount lending are also tools of monetary policy, but they are not directly related to the implementation of the Taylor Rule, which focuses on adjusting policy rates to stabilize the economy.

The Taylor Rule Would Be Implemented by a Central Bank