According to the Taylor Rule,the Fed Should Set the Target

question 151

Multiple Choice

According to the Taylor rule,the Fed should set the target for the federal funds rate equal to the sum of the equilibrium real federal funds rate,the current inflation rate,one-half times the ________,and one-half times the ________.

• A)interest rate gap; inflation gap
• B)interest rate gap; output gap
• C)inflation gap; output gap
• D)unemployment gap; government-spending gap

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Definitions:

Growth Rate

A measure of the increase in size, number, value, or strength of something over a particular period of time.

Competitor's Increases

Refers to the actions or strategies by which competing entities or businesses seek to grow, expand market share, or enhance capabilities relative to others in the same market.

Same Species

Organisms that belong to the same species are capable of interbreeding and producing fertile offspring.

Immune System

The body's defense system composed of organs, tissues, cells, and proteins that work together to fight off pathogens and foreign substances.