Given the Following Formula for the Taylor Rule: ?Target Federal

question 95

Multiple Choice

 Given the following formula for the Taylor rule: ?Target federal funds rate = natural rate of interest + current inflation + ½(inflation gap) +½(output gap) if the current rate of inflation is 5%, the natural rate of interest is 2%, and the target rate of inflation is 2%, and output is 3% above its potential, the target federal funds rate would be: ?

• A) 6.5%.?
• B) 2.5%.?
• C) 3.5%.?
• D) 10%.

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Definitions:

Base

A substance that can accept hydrogen ions (protons) or more generally, donate a pair of valence electrons; in water, it increases the concentration of hydroxide ions (OH-).

IR Spectroscopy

A technique in analytical chemistry used to identify and study chemicals through the interaction of infrared radiation with matter.

Trimethylamine

A nitrogen-containing organic compound with the formula N(CH3)3, known for its strong fishy odor and used in various industrial applications.

Mass Spectrum

A graph or chart that shows the distribution of mass-to-charge ratios of ions in a sample, which is used for determining the composition of the sample.