Suppose the Inflation Rate Is 3 Percent and the Output

question 42

Multiple Choice

Suppose the inflation rate is 3 percent and the output gap is -1 percent. Using the Taylor rule, the Bank of Canada sets the overnight loans rate equal to

• A)5 percent.
• B)6 percent.
• C)4 percent.
• D)1 percent.
• E)5.5 percent.

---

Definitions:

Reflex Arc

The neural pathway that controls a reflex action, including at least one sensory neuron and one motor neuron, creating an automatic response to a stimulus.

Receptor

A protein molecule that receives and responds to chemical signals from hormones, neurotransmitters, or other stimuli outside the cell.

Vestibulocochlear

Pertaining to the vestibulocochlear nerve, the eighth cranial nerve, which is responsible for transmitting sound and equilibrium (balance) information from the inner ear to the brain.

Accessory

Relating to additional or auxiliary components or structures, often used to describe nerves or muscles that supplement a primary function.