If There Is a 2 Percent Unemployment Gap and the Inflation

question 244

Multiple Choice

If there is a 2 percent unemployment gap and the inflation rate is 1 percent, then according to the Taylor rule, the Fed should make their targeted interest rate

• A) decrease to 0.5 percent.
• B) decrease to 3 percent.
• C) decrease to 1.5 percent.
• D) decrease to 1 percent.

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Definitions:

Wisdom of the Crowd

The phenomenon that collective judgment or decision of a diverse group of individuals is often more accurate than that of any single member of the group.

Ringelmann Effect

The phenomenon where individual productivity decreases as the size of a group increases, often due to coordination and motivation issues.

Anonymity

The state of being anonymous, where an individual's identity is not known or revealed.

Social Facilitation

The tendency for people to perform differently when in the presence of others than when alone, typically improving on simple tasks and performing poorly on complex tasks.