If the Actual Federal Funds Rate Is Substantially Above the Appropriate

question 15

Multiple Choice

If the actual federal funds rate is substantially above the appropriate rate implied by the Taylor rule, this indicates that

• A)monetary policy is overly expansionary and a shift toward a more restrictive policy would be appropriate.
• B)monetary policy is too restrictive and a shift to a more expansionary policy would be appropriate.
• C)monetary policy is unable to influence interest rates, and therefore it is unable to influence either output or prices.
• D)current monetary policy is on target and no policy shifts should be made.

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Definitions:

Hypersegregation

An extreme form of racial segregation in urban areas where minority groups are isolated from the majority in multiple aspects of daily life.

Racial Groups

Collections of people who are categorized based on shared physical or social qualities into categories generally viewed as distinct within a given society.

U.S. Cities

Urban areas within the United States characterized by significant populations, infrastructure, and economic activity.

Redlining

A discriminatory practice by which services (like banking or insurance) are withheld from potential customers in certain areas, often based on race.