Question

In a few sentences, explain what the Taylor rule is and why it is important for...

In a few sentences, explain what the Taylor rule is and why it is important for monetary policy.

Homework Answers

Answer #1
  • Taylor rule is an Economic model which analyses inflationary pressure of an Economy forecasts interest rates in order to stabilize the Economy.
  • The Taylor rule is important for monetary policy decisions as it describes the interest rate decisions of the federal open Market committee as it is considered as a benchmark for monetary policy.
  • The Taylor rule states that central bank must change the interest rates in accordance with the inflation and various other conditions with in an Economy
  • According to this rule, when GDP is undergoing rapid growth above its potential level or when the Economy is under inflationary pressure, the federal reserve should raise interest rates and when the GDP growth is below its potential level and when there is less inflationary pressure in the Economy, the fed should lower the interest rates
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
What is meant by a Taylor rule? Describe rule based monetary policy, and the pros and...
What is meant by a Taylor rule? Describe rule based monetary policy, and the pros and cons of such an approach? Then describe how the Taylor rule approach affects central bank credibility
In a few sentences, explain to me why the two key conditions for fitting a logistic...
In a few sentences, explain to me why the two key conditions for fitting a logistic regression model are important to have.
What is an agency problem? Explain in a few sentences what is an agency problem is?...
What is an agency problem? Explain in a few sentences what is an agency problem is? What is the nature of the problem? And give an example or two.
Explain the concept of the 80/20 rule and why it is important to marketer.
Explain the concept of the 80/20 rule and why it is important to marketer.
According to the monetary policy rule, under what condition does the real interest rate equal the...
According to the monetary policy rule, under what condition does the real interest rate equal the natural rate of interest? What does the Taylor principle suggest for monetary policy design?
What is the Taylor Rule in AS/AD framework?
What is the Taylor Rule in AS/AD framework?
Using the Taylor Rule as described in Chapter 9, explain what happens to the economy when...
Using the Taylor Rule as described in Chapter 9, explain what happens to the economy when the Fed increases the nominal interest rate by less than the increase in inflation.
Explain in 4 or more sentences why you think that health and wellbeing is an important...
Explain in 4 or more sentences why you think that health and wellbeing is an important responsibility for human resources department and how does it impact the organisation?
Explain in a few sentences what would happen according to the Law of One Price to...
Explain in a few sentences what would happen according to the Law of One Price to the supply and demand if identical assets were priced differently in two different regions.
(please type not handwrite) Astronomy Question 1 a. In a few sentences, describe Io and explain...
(please type not handwrite) Astronomy Question 1 a. In a few sentences, describe Io and explain why it has the properties that it does. b. Why is Europa thought to be a good place to look for life?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT