Using Taylor's Rule,when the Equilibrium Real Federal Funds Rate Is

question 12

Multiple Choice

Using Taylor's rule,when the equilibrium real federal funds rate is 2 percent,there is no output gap,the actual inflation rate is zero,and the target inflation rate is 2 percent,the nominal federal funds rate should be

• A)0 percent.
• B)1 percent.
• C)2 percent.
• D)3 percent.

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Definitions:

Lorenz Curve

A graphical representation used in economics to show the distribution of income or wealth within a society, illustrating levels of inequality.

Personal Distribution

The distribution of income and wealth among individuals and households in an economy.

Gini Ratio

An index that quantifies the disparity in income distribution among a population, where 0 signifies complete equality and 1 denotes complete disparity.

Income Distribution

The way in which total income is shared among the population or different groups within a society.