The Taylor rule A) is a rule stating that money should grow at ...

[nramada]

The Taylor rule
 
  A) is a rule stating that money should grow at a constant rate.
  B) is not considered to be a practical policy rule for central banks to follow.
  C) dictates that the central bank's target interest rate be responsive to real economic activity and to inflation.
  D) dictates that the nominal interest rate stay constant in the long run.

Question 2

Is the Taylor rule of greater use to activist or to nonactivist policy makers?
 
  What will be an ideal response?

[momolu]

Answer to Question 1

C

Answer to Question 2

Nonactivist. The Taylor rule is an alternative to discretionary policy that relies on debatable projections to justify arguably ad hoc interventions. The rule is too crude to eliminate discretion entirely, but serves as a restraint on activist tendencies.