According to the Taylor Rule, If the Central Bank Announced

question 20

Multiple Choice

According to the Taylor rule, if the central bank announced a zero percent inflation target but the current inflation rate is 2% and output is at the full-employment level, at what level should the central bank set the nominal interest rate?

• A)1%
• B)2%
• C)3%
• D)4%
• E)5%

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Definitions:

Formal Operations

A stage in Piaget's theory of cognitive development, typically starting around age 12, where individuals develop the ability to think abstractly, logically, and systematically.

Concrete Operations

The stage in Piaget's theory of cognitive development in which children aged about 7 to 12 years become capable of logical thought processes but are not yet adept at abstract reasoning.

Preoperational

Pertains to Piaget’s stage of cognitive development (typically ages 2-7) in which children start to use language to explore and understand their environments, but do not yet use logical mental operations.

Sensorimotor

Referring to the developmental stage in Piaget's theory of cognitive development, where infants learn through interacting with the world using their senses and motor abilities.