Suppose the Inflation Rate Target Is Zero and the Long-Run

question 12

Multiple Choice

Suppose the inflation rate target is zero and the long-run federal funds target is also zero.If the federal funds rate set using the Taylor rule is 1.5 percent and inflation rate is 3 percent,the output gap is ________.

• A) −6 percent
• B) 1.5 percent
• C) 4.5 percent
• D) 6 percent

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Definitions:

Personality Disorders

A group of mental disorders characterized by enduring maladaptive patterns of behavior, cognition, and inner experience, exhibited across many contexts.

Personality Psychology

A branch of psychology that studies personality and its variation among individuals, including traits, behaviors, and patterns.

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Themes or ideas that apply across different areas of study, indicating commonalities or shared concerns.

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