Using Taylor's Rule, When the Equilibrium Real Overnight Rate Is

question 49

Multiple Choice

Using Taylor's rule, when the equilibrium real overnight rate is 2 percent, there is no output gap, the actual inflation rate is zero, and the target inflation rate is 2 percent, the nominal overnight rate should be ________.

• A) 0 percent
• B) 1 percent
• C) 2 percent
• D) 3 percent

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Definitions:

Cyclic AMP

A secondary messenger used for intracellular signal transduction, such as transferring the effects of hormones like glucagon and adrenaline.

GTP

Guanosine triphosphate, a molecule that provides energy for many biochemical cellular processes by hydrolysis of its high-energy phosphate bonds.

Autocrine

A process in which a cell releases a hormone or chemical messenger that attaches to autocrine receptors on the same cell, causing alterations in the cell's state.

Chemicals Produced by Neurons

Substances such as neurotransmitters that are synthesized and released by neurons to transmit signals across synapses.