According to the Monetary Policy Rule, the Fed Raises Interest

question 49

Multiple Choice

According to the monetary policy rule, the Fed raises interest rates only when

• A)inflation is high.
• B)the rate of inflation is above its target inflation rate.
• C)the interest rate is below its target rate of interest.
• D)the rate of inflation is rising.
• E)real GDP is greater than potential GDP.

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Definitions:

Probability

A numeric scale from 0 to 1 indicating how probable an event is to take place.

Statistic

A numerical value that describes a characteristic of a sample.

Regions of Rejection

Areas in a statistical test that, if a test statistic falls within, lead to the rejection of the null hypothesis.

Critical Value

The threshold value that the test statistic must exceed in order for the null hypothesis to be rejected.