Which of the Following Is NOT a Basis for the Taylor-Rule

question 24

Multiple Choice

Which of the following is NOT a basis for the Taylor-rule guideline for how the Federal Reserve should set its target value for the federal funds rate?

• A) an estimated long-run real interest rate
• B) the current deviation of the actual inflation rate from the Fed's inflation objective
• C) the present deviation of the actual unemployment rate from the Fed's unemployment objective
• D) the gap between actual real GDP and a measure of potential real GDP

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Definitions:

Real Time

The actual time during which a process or event occurs, often used in the context of processing or reporting data immediately.

Positron-Emission Tomography (PET)

An imaging test that uses a radioactive substance called a tracer to look for disease or injury in the brain.

Biochemical Changes

Alterations in the chemical processes and substances within living organisms, often referring to changes that affect mood, behavior, and cognition.

Brain Waves

Patterns of electrical activity in the brain, indicative of different states of consciousness, such as wakefulness or sleep.