According to the Taylor Rule

question 59

Multiple Choice

According to the Taylor rule:

• A) if inflation is equal to target inflation, the central bank should set the real interest rate equal to zero.
• B) if inflation is equal to target inflation, the central bank should set the nominal interest equal to its short- run value.
• C) the central bank should not care about the unemployment rate.
• D) if inflation is equal to target inflation, the central bank should set the real interest rate equal to its medium- run value.
• E) if inflation is equal to target inflation, the central bank should set the nominal interest rate equal to its medium- run value.

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Definitions:

Residual Volume

The volume of air remaining in the lungs after a forced exhalation, preventing lung collapse and ensuring continuous gas exchange.

Expiratory Reserve Volume

The additional amount of air that can be forcibly exhaled after the completion of a normal, quiet exhalation.

Inspiratory Reserve Volume

Inspiratory Reserve Volume is the additional amount of air that can be inhaled after a normal inhalation, contributing to the total lung capacity.

Tidal Volume

The volume of air inhaled or exhaled in a normal breath at rest.