According to the Taylor Rule,the Fed Should

question 45

Multiple Choice

According to the Taylor rule,the Fed should:

• A) lower the fed funds rate by 0.5% if GDP increases 1.0% over potential GDP.
• B) raise the fed funds rate by 0.5% if GDP increases 1.0% over potential GDP.
• C) raise the fed funds rate by 1.0% if GDP increases 0.5% over potential GDP.

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Definitions:

Nonparametric Method

Statistical methods that do not assume a particular distribution for the data, often used when data doesn't fit normal distribution assumptions.

Matched Pairs

A study design in which each subject in one group is matched with a similar subject in another group, often used to control for varying variables.

Interval Data

Represents data that has meaningful intervals but no true zero, allowing for both order and the exact difference between values to be understood.

Parametric T-test

A statistical test used to compare the means of two groups, assuming that the data are drawn from populations with normally distributed variables.