The Taylor Rule Uses Three Variables to Determine the Target

question 104

Multiple Choice

The Taylor rule uses three variables to determine the target for the federal funds rate. Which of the following is NOT one of those variables?

• A) monetary base
• B) equilibrium real interest rate
• C) inflation rate
• D) output gap

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Definitions:

Variable Costs

Costs that fluctuate with the level of output, including raw materials, labor, and energy consumption.

Assets Utilized

The resources and assets a company effectively uses in its operations to generate revenue.

Formulas

Prescribed sets of instructions or rules expressed in mathematical symbols and operations designed to solve problems or calculate values.

Vendor Managed Inventory (VMI)

A supply chain initiative where the supplier assumes the responsibility of managing inventory levels for the customer.