Answer to Question #80767 in Microeconomics for Dileep K

Question

If (A) -------- interest rates when the output gap and the (B) --------- both fall when a central bank applies a taylor rule in the management of its monetary policy

Answer 1

If lowers interest rates when the output gap and the difference between the actual inflation rate and the bank's target inflation rate both fall when a central bank applies a taylor rule in the management of its monetary policy