The Taylor Rule States That the

question 129

Multiple Choice

The Taylor Rule states that the

• A) Fed should target the monetary base and not the federal funds rate.
• B) Fed should adjust the federal funds rate to take account of deviations of inflation from its target and real GDP from potential GDP.
• C) use of an exchange rate target, although costly, is economically efficient.
• D) None of the above is correct.

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Definitions:

Closing Entry

Journal entries made at the end of an accounting period to transfer temporary account balances to permanent accounts, thus preparing the books for the next period.

Reversing Entry

An accounting entry made at the beginning of a period to reverse the effects of certain adjustments made in the previous period.

Salary Expense

The cost incurred by a business to pay its employees.