If the Fed Sets the Federal Funds Rate Equal to 2

question 86

Multiple Choice

If the Fed sets the federal funds rate equal to 2 plus the inflation rate plus one-half of the inflation gap plus one-half of the output gap,it is following:

• A) Friedman's monetary rule.
• B) inflation targeting procedures.
• C) monetary targeting procedures.
• D) the Taylor rule.

---

Definitions:

Kelley's Covariation Model

A theory in social psychology that explains how people attribute cause and effect based on the patterns of variability, consistency, and consensus.

Consistency

The state of being coherent and uniform in thoughts, beliefs, or actions over time.

External Factor

An external factor refers to influences from the external environment that impact individuals or organizations, often beyond their control.

Fusiform Face Area

A region in the temporal lobe of the brain that helps us recognize the people we know.