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Which describes the difference between the Taylor rule and inflation targeting?  A)The Taylor rule responds to past inflation, and inflation targeting is based on a forecast of inflation. B)The Federal Reserve uses inflation targeting, and the Bank of England uses the Taylor rule. C)Inflation targeting responds to past inflation, and the Taylor rule is based on a forecast of inflation. D)Inflation targeting is a strategy used in conducting fiscal policy, while the Taylor rule is used in monetary policy.

Question

Which describes the difference between the Taylor rule and inflation targeting?

 

 

A)

The Taylor rule responds to past inflation, and inflation targeting is based on a forecast of inflation.

 

B)

The Federal Reserve uses inflation targeting, and the Bank of England uses the Taylor rule.

 

C)

Inflation targeting responds to past inflation, and the Taylor rule is based on a forecast of inflation.

 

D)

Inflation targeting is a strategy used in conducting fiscal policy, while the Taylor rule is used in monetary policy.

check_circleAnswer
Step 1

Inflation targeting is a framework for conducting monetary policy that involves the central bank announcing its target level of inflation. It indicates that it responds for past inflation

The Taylor rule stipulates how the Fed should chan...

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