Using the Taylor Rule, If Inflation Is 1 Percent, Desired

question 166

Multiple Choice

Using the Taylor rule, if inflation is 1 percent, desired inflation is 2 percent, and output is 2 percentage points below potential, the Fed should target a federal funds rate of:

• A)6.5.
• B)4.5.
• C)2.5.
• D)1.5.

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Definitions:

Posterior Tibial Artery

A major artery of the lower leg that supplies oxygenated blood to the posterior compartment of the leg and plantar surface of the foot.

Pulmonary Trunk

The major vessel that carries blood from the heart to the lungs for oxygenation.

Right Ventricle

The chamber within the heart that is responsible for pumping oxygen-depleted blood to the lungs.

Azygos Vein

A vein running up the right side of the thoracic vertebral column, draining blood from the chest walls and upper lumbar region into the superior vena cava.