Between Approximately 2001 and 2006, the Taylor Rule Predicted the Federal

question 55

Multiple Choice

Between approximately 2001 and 2006, the Taylor rule predicted the federal funds rate was:

• A) greater than the actual federal funds rate
• B) less than the actual federal funds rate
• C) statistically equal to the actual federal funds rate
• D) negatively correlated with the federal funds rate
• E) None of these answers are correct; the Taylor rule is used to predict the natural rate of unemployment.

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Definitions:

Current Ratio

It's a financial ratio that calculates whether a corporation can cover its obligations that need to be paid within one year, by dividing the current assets by the current liabilities.

Plant Assets

Tangible assets that are used in the operations of a business and are not intended for resale, including buildings, machinery, and equipment.

Natural Business Year

The fiscal year that ends when a business's activities have reached the lowest point in its annual operating cycle, theoretically the most optimal time for financial reporting.

Adjusting Entry

A journal entry made at the end of an accounting period to allocate income and expenditure to the appropriate years.