The Taylor rule is a:
A) Strictly passive approach to monetary policy
B) Strictly activist approach to monetary policy
C) Combined passive and activist approach to monetary policy
D) Coordination directive for monetary and fiscal policy

Question

Quizplus · Accepted Answer

The Taylor rule is a combined passive and activist approach to monetary policy, which suggests that the central bank can adjust interest rates in response to changes in inflation, output and other economic variables, but within a specific framework of predetermined rules. It is not a coordination directive for monetary and fiscal policy, nor a strictly passive or activist approach to monetary policy.

The Taylor Rule Is A