Given the Following Formula for the Taylor Rule: Target Federal

question 90

Multiple Choice

Given the following formula for the Taylor rule: Target federal funds rate = 2 + current inflation + ½(inflation gap) +½(output gap)
If the current rate of inflation is 4% and the target rate of inflation is 2%, and output is 3% above its potential, the target federal funds rate would be:

• A)7%
• B)9%
• C)5%
• D)4.5%

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Definitions:

Egocentric Fallacy

The mistaken belief that one's own personal experience or values are universal.

Ethnocentrism

The belief in the superiority of one's own ethnic group or culture over others.

Phallocentrism

A cultural perspective that prioritizes the male perspective and the phallus as a symbol of male dominance.

Genitalia

The organs of the reproductive system, especially those visible on the external body.