According to the Taylor Rule, If There Is an Expansionary

question 140

Multiple Choice

According to the Taylor rule, if there is an expansionary gap of 2 percent of potential output and inflation is 3 percent, what real interest rate will the Fed set?

• A)1.5 percent
• B)2 percent
• C)2.5 percent
• D)3.5 percent

---

Definitions:

French and Indian War

A conflict from 1754 to 1763 in North America, part of a global struggle between Britain and France, also known as the Seven Years' War.

Property Taxes

Levies imposed by local governments based on the assessed value of real estate property owned, commonly used to fund public services such as education and infrastructure.

Colonial Ventures

Refer to expeditions, settlements, and enterprises established by colonial powers in foreign lands, primarily from the 15th to the 20th century.

Political Freedoms

The rights of individuals in a society to participate in political life, including freedoms of speech, assembly, and the ability to vote or run for office.