Consider the Following Rule for Monetary Policy: R = 2

question 41

Multiple Choice

Consider the following rule for monetary policy: r = 2 percent + π + 1/2y - y*) /y* + 1/2π - π*) , where r is the nominal federal funds rate, y is real GDP, y* is an estimate of the natural rate of output, π is the inflation rate, and π* is the inflation target. Other things the same, if the inflation rate rises by 1 percentage point this rule says the Fed should increase the nominal federal funds rate by

• A) 1/2 percentage point
• B) 1 percentage point
• C) 1 and 1/2 percentage points
• D) 3 and 1/2 percentage points

Identify strategies to foster creativity and avoid pitfalls in decision-making.

Grasp the importance of ethical considerations in decision-making.

Comprehend the concept and use of ‘rules of thumb’ or heuristics for simplifying decision-making.

Understand the significance of consulting with others in the decision-making process.

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Definitions:

Fundamental Rights

Basic human freedoms and protections that are guaranteed by the constitution or recognized universally, such as freedom of speech and right to equality.

Human Resource Specialists

Professionals focused on managing and implementing policies related to the workforce of an organization, including recruitment, training, and compliance with labor laws.

Reverse Discrimination

Discrimination against members of a dominant or majority group, often as an unintended consequence of policies designed to correct historical discrimination.

Human Rights Act

Legislation that protects individuals against discrimination and ensures equality before the law in various aspects of public life.