Suppose the Inflation Rate Is 3 Per Cent and the Output

question 100

Multiple Choice

Suppose the inflation rate is 3 per cent and the output gap is - 1 per cent. Assuming the equilibrium real interest rate is 2 per cent, using the Taylor rule what target should the Reserve Bank set for the cash rate?

• A)4 per cent
• B)1 per cent
• C)6 per cent
• D)5 per cent

---

Definitions:

Fast-forwarding

The action of moving through content or media at a speed faster than that intended by the producer, commonly used to skip parts or to save time.

Weber's Law

A principle stating that the just noticeable difference between two stimuli is proportional to the magnitude of the stimuli.

Retail Store

A business establishment that sells goods directly to consumers through various channels, including physical locations and online platforms.

Readership Ad Scores

Metrics used to evaluate the effectiveness and impact of advertising based on audience readership.