According to the Taylor Rule, When Real GDP Is Equal

question 102

Multiple Choice

According to the Taylor rule, when real GDP is equal to potential GDP and inflation is equal to its target rate of 2 percent, the Federal fund rate should:

• A) Be increased by 10 percent
• B) Be decreased by 10 percent
• C) Remain at about 4 percent
• D) Remain at about 8 percent

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Definitions:

Ownership Percentage

The fraction or percentage of a company that is owned by a shareholder or group of shareholders.

Voting Shares

Shares that give the shareholder the right to vote on corporate matters.

Stock Split

A corporate action in which a company divides its existing shares into multiple shares to boost the liquidity of the shares.

Additional Shares

Extra shares issued by a company, which can result from financing activities, stock splits, or dividend reinvestment plans.