According to the Taylor Rule, If the Unemployment Rate Is

question 359

Multiple Choice

According to the Taylor rule, if the unemployment rate is 3.3 percent and there is no inflation gap, the Fed should

• A) raise the Fed's targeted interest rate by 1 percentage point.
• B) lower the Fed's targeted interest rate by 1 percentage point.
• C) lower the federal funds rate by 3.3 percentage points.
• D) do nothing, as the economy will correct itself.

---

Definitions:

Small for Date

A term used to describe newborns that are smaller than the average for their gestational age, often due to factors affecting growth in the womb.

Preterm

A birth that occurs 35 or fewer weeks after conception.

Gestation

The process or period of developing inside the womb between conception and birth.

Gestational Age

The age of an embryo or fetus from the first day of the mother's last menstrual period, used to determine expected delivery date.