Suppose the Equilibrium Real Interest Rate Is 2 Percent Per

question 164

Multiple Choice

Suppose the equilibrium real interest rate is 2 percent per year, inflation is 2.5 percent and the output gap is 1 percent. Using the Taylor rule, what is the federal funds rate?

• A) 3.5 percent
• B) 5.25 percent
• C) 3 percent
• D) 5.5 percent

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Definitions:

Sociocultural Model

The theoretical perspective that emphasizes the effects of society, culture, and social and family groups on individual behavior.

Cognitive-Behavioral

A psychological approach that addresses dysfunctional emotions, behaviors, and cognitions through a goal-oriented, systematic procedure.

Psychodynamic

A psychological perspective focusing on the interplay between unconscious and conscious mental processes shaping personality and behavior.

Anomic Suicide

Suicide committed by individuals whose social environment fails to provide stability, thus leaving them without a sense of belonging.