Conducting Monetary Policy So That FF Rate = Inflation+ 0

question 12

Multiple Choice

Conducting monetary policy so that FF rate = inflation+ 0.5 (inflation - 2) + 0.5 (GDP gap) , where FF rate is the nominal federal funds interest rate and GDP gap if the percentage shortfall of real GDP from its natural level, is an example of:

• A)an active policy rule.
• B)a passive policy rule.
• C)discretionary policy.
• D)an automatic stabilizer.

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Definitions:

Sedimentation Rate

A blood test that measures how quickly red blood cells settle at the bottom of a test tube, indicating the presence of inflammation in the body.

Fibrin

A fibrous, non-globular protein involved in the clotting of blood, formed by the action of the enzyme thrombin on fibrinogen.

Leukapheresis

A medical procedure that involves the separation and removal of white blood cells from the blood.

Erythrocyte Sedimentation Rate (ESR)

A blood test that measures how quickly erythrocytes (red blood cells) settle at the bottom of a test tube that contains a blood sample.