If the Inflation Rate Target Is 2%,the Current Inflation Rate

question 51

Multiple Choice

If the inflation rate target is 2%,the current inflation rate is 1%,and the output gap is minus 2%,then according to the Taylor rule,the nominal federal funds rate should be ________ percent.

• A)zero
• B)two
• C)four
• D)three
• E)none of the above

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Definitions:

Segment Assets

Assets that are allocated to a company's operational segments or divisions for the purpose of financial reporting.

Price/Earnings Ratio

A valuation metric for a company that measures its current share price relative to its per-share earnings.

Preferred Dividends

Payments made to preferred shareholders, often at a fixed rate, that take precedence over dividends to common shareholders.

Common Dividends

Profits distributed to shareholders of common stock, reflecting the company's earnings and financial health.