Given a Monetary Policy Rule of the Form R =

question 9

Multiple Choice

Given a monetary policy rule of the form r = p + 0.5Y^{^} + 0.5p - p*) + 0.03, a negative aggregate demand shock resulting in a -5 percent GDP gap leads the Fed to

• A) lower nominal interest rates by 5 percent.
• B) lower the real interest rate target by 2.5 percent.
• C) lower nominal interest rates by 2.5 percent.
• D) lower the inflation target by 2.5 percent.
• E) wait and see if the shock turned out to be a permanent change.

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Definitions:

Sociometric Status

A measure of an individual's social standing or acceptance within a group, based on peer evaluations.

Sociable

The quality of being inclined to seek out and enjoy the company of others, often associated with being friendly and outgoing.

Aggressive

Characterized by or exhibiting behavior that intends to harm or assert dominance over others.

Sociometric Status

Sociometric status refers to a measurement of social standing within a group, based on the extent to which individuals are liked or accepted by their peers.