2. Monetary Policy Rule A basic monetary policy rule we discussed is that when inflation changes unexpectedly the central bank should adjust its policy rate in the same direction and more than the change in inflation. Why is this thought of as an essential move by the central bank?
2. Monetary Policy Rule A basic monetary policy rule we discussed is that when inflation changes unexpectedly the central bank should adjust its policy rate in the same direction and more than the change in inflation. Why is this thought of as an essential move by the central bank?
Principles of Economics (MindTap Course List)
8th Edition
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter35: The Short-Run Trade-off Between Inflation And Unemployment
Section: Chapter Questions
Problem 5PA
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