Suppose That the Equilibrium Real Interest Rate Is 2 Percent

question 82

Multiple Choice

Suppose that the equilibrium real interest rate is 2 percent per year, inflation is 2.5 percent and the output gap is 1 percent. Using the Taylor rule, what is the federal funds rate?

• A) 3 percent
• B) 3.5 percent
• C) 5.25 percent
• D) 5.5 percent

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Definitions:

Peer Evaluations

Assessments of an individual's performance, contributions, or competence, made by their colleagues rather than superiors.

Developmental Purposes

Developmental purposes are objectives aimed at fostering growth, skill enhancement, and overall improvement within an individual or organization.

Criterion Contamination

Occurs when performance evaluation measures are influenced by factors unrelated to the actual job performance.

Employee's Control

The degree of influence and authority employees have over their work environment and tasks.