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17. The Taylor Rule is a type of discretionary policy. an activist policy that suggests a...

17. The Taylor Rule is

  1. a type of discretionary policy.

  2. an activist policy that suggests a target for the Federal Funds rate based on economic conditions.

  3. an activist policy that suggests a target for the inflation rate based on economic conditions.

  4. a non-activist rule that suggests a constant rate of money growth regardless of economic conditions.

18. Over short periods of time, A. real GDP growth is stable.
B. velocity of money is stable.
C. growth in velocity is volitile.

D. the inflation rate is stable.

19. Suppose the chair of the Federal Reserve asks you how to keep price level stable over the next 25 years, your best answer is

A. keep the unemployment rate low over the next 25 years.
B. follow the Taylor rule.
C. keep growth in real GDP low over the next 25 years.
D. keep the average growth rate of money low over the next 25 years. E. adopt a gold standard.

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