Under Its Recent Policy of Inflation Targeting, the Fed Has

question 68

Multiple Choice

Under its recent policy of inflation targeting, the Fed has committed to adjusting monetary policy as necessary to achieve a target inflation rate of

• A)5 percent.
• B)2 percent.
• C)0 percent.
• D)8 percent.

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Definitions:

Standard Deviation

A measure that quantifies the amount of variation or dispersion of a set of data values from the mean.

Standard Normal Random Variable

A special case of the normal distribution with a mean of zero and a standard deviation of one.

Probability

The measure of the likelihood that an event will occur, expressed as a number between 0 and 1, where 0 indicates impossibility and 1 indicates certainty.

z

A standard score representing the number of standard deviations an observation or datum is above or below the mean of what is being observed or measured.