Multiple Choice
A central bank that does NOT follow the Taylor principle will fail to raise nominal interest rates by more than the increase in expected inflation. Therefore,higher inflation will lead to a ________ in real interest rates,resulting in ________-sloping monetary policy curves.
A) decline;downward
B) rise;downward
C) rise;upward
D) decline;upward
Correct Answer:
Verified
Correct Answer:
Verified
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