According to the Taylor Rule,the Fed Should Set the Target

question 151

Multiple Choice

According to the Taylor rule,the Fed should set the target for the federal funds rate equal to the sum of the equilibrium real federal funds rate,the current inflation rate,one-half times the ________,and one-half times the ________.

• A)interest rate gap; inflation gap
• B)interest rate gap; output gap
• C)inflation gap; output gap
• D)unemployment gap; government-spending gap

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Definitions:

Fraternal Twins

Twins who are born at the same time but are not genetically identical; they developed from two different eggs fertilized by separate sperm cells.

Predictive Validity

The extent to which a score on a scale or test predicts future performance or behaviors.

Aptitude Test

A standardized test designed to measure an individual's potential to perform tasks or learn new skills.

Criterion Behavior

Criterion behavior refers to a specific behavior that serves as a standard or reference for evaluating or assessing performance or conditions.