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What is considered the most relevant interest rate when conducting monetary policy?

A. Short-term nominal interest rate
B. Long-term nominal interest rate
C. Annual nominal interest rate

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Joshua Stredder
Joshua StredderLv10
19 Oct 2020

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Related questions

Why does the monetary policy curve slope​ upward? ​(check all that​ apply.)

a. Monetary policymakers will follow the Taylor principle and respond aggressively to a decrease in the inflation rate by raising nominal interest rates by an even greater amount so that the real interest rate also rises.

b. When inflation​ increases, the supply of real money balances increases. This increases the equilibrium nominal interest rate in the money​ market, which also increases the real interest rate in the short run.

c. Monetary policymakers will follow the Taylor principle and respond aggressively to an increase in the inflation rate by raising nominal interest rates by an even greater amount so that the real interest rate also rises.

d. When inflation​ increases, the supply of real money balances declines. This increases the equilibrium nominal interest rate in the money​ market, which also increases the real interest rate in the short run.

If the real rate of interest is negative, then, ceteris paribus,
a. The nominal interest rate is negative
b. Monetary policy is tight
c. The nominal interest rate is less than the anticipated inflation rate
d The inflation rate is negative

An upward-sloping term structure of interest rates indicates:

A. the real rate of return is lower for short-term bonds than for long-term bonds.

B. there is an indirect relationship between real interest rates and time to maturity.

C. there is an indirect relationship between nominal interest rates and time to maturity.

D. the nominal rate is declining as the real rate rises as the time to maturity increases.

E. the nominal rate is increasing even though the real rate is constant as the time to maturity increases.

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