The Next Questions Refer to the Following

question 7

Multiple Choice

The next questions refer to the following.
Suppose the central bank follows the Taylor Rule
nominal interest rate = .03 + .5(output gap) + 1.5(inflation rate - .02) .
-The real interest rate will be approximately

• A) -.01
• B) .02
• C) .025
• D) .05
• E) .07

---

Definitions:

Digested Blood

Blood that has been broken down and metabolized, often referring to its appearance in medical contexts.

Gloss/o

A prefix related to the tongue, often used in medical terms related to the tongue or speech.

Hepat/o

A prefix used in medical terminology to refer to the liver, utilized in terms denoting liver-related conditions or anatomy, such as hepatitis (inflammation of the liver).

Ile/o

Refers to the ileum, the third and final part of the small intestine in the digestive system.