A Monetary Policymaker Using a Taylor Rule Could Cause Persistently

question 25

Multiple Choice

A monetary policymaker using a Taylor Rule could cause persistently increasing inflation if

• A) the estimate of the equilibrium real federal funds rate is too high.
• B) the inflation target is too high.
• C) the estimate of potential GDP is too high.
• D) all of the above.

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Definitions:

Cranial Nerves

Twelve pairs of nerves that emerge directly from the brain, rather than the spinal cord, and supply motor and sensory functions to the head and neck.

Ganglia

Structures containing a collection of nerve cell bodies, typically located outside the brain and spinal cord.

Peripheral Nervous System

The part of the nervous system that consists of the nerves and ganglia outside of the brain and spinal cord, connecting the CNS to limbs and organs.

Peripheral Nervous System

The section of the nervous system lying outside the brain and spinal cord, which contains all the nerves that connect the CNS to the rest of the body.