According to the Taylor Rule,for a Given Inflation Rate,________

question 55

Multiple Choice

According to the Taylor rule,for a given inflation rate,________.

• A) if bank reserves double, the federal funds rate should double
• B) if nominal output doubles, the federal funds rate should double
• C) every percentage point increase in the inflation rate increases the federal funds rate by 1.5 percentage points
• D) every percentage point increase in the nominal interest rate increases the federal funds rate by 1 percentage point

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Definitions:

Long-run Supply Function

A relationship showing the quantity of a good that producers are willing and able to supply to the market at different price levels in the long run, taking into account all possible adjustments including those in resources and technology.

Rental Apartments

Housing units that are leased to tenants under a rental agreement, typically involving periodic payments in exchange for the right to occupy the property.

Civic Authorities

Government or municipal bodies responsible for managing local affairs, services, and regulations within a community or city.

Long-run Supply Function

A relationship showing the quantity of goods that will be supplied over a longer period when all inputs can be varied.