The Taylor Rule Uses Three Variables to Determine the Target

question 104

Multiple Choice

The Taylor rule uses three variables to determine the target for the federal funds rate. Which of the following is NOT one of those variables?

• A) monetary base
• B) equilibrium real interest rate
• C) inflation rate
• D) output gap

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Definitions:

Tax Purposes

Pertaining to or in order to comply with tax laws and regulations.

Head of Household

Head of Household is a filing status for individual U.S. taxpayers who are unmarried and pay more than half the cost of keeping up a home for themselves and a qualifying person.

Dependent Widowed Mother

A widowed mother who relies on another, typically her child, for financial support and can be claimed as a dependent for tax purposes if certain criteria are met.

Legally Divorced

A status that indicates a person has completed the legal process of divorce, thereby dissolving the marital relationship under law.