In the Taylor Rule, If the Output Coefficient ? Is

question 7

Multiple Choice

In the Taylor rule, if the output coefficient ? is set to zero, then the central bank

• A)is mostly concerned with maintaining a low inflation rate
• B)will lower interest rates whenever it goes above 2 percent
• C)will aggressively increase interest rates as soon as inflation rises
• D)engages in real GDP targeting
• E)none of the above

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Definitions:

Pay Attention

The mental activity of focusing attentively on a particular element of one's surroundings while disregarding other stimuli.

Forgets

The failure to remember information or experiences that were once known or familiar.

Schizophrenia

A chronic psychiatric disorder characterized by distorted thoughts, perceptions, emotions, language, sense of self, and behavior.

Dopamine Hypothesis

A theory suggesting that the symptoms of schizophrenia are due to an excess of dopamine activity in the brain.