Using the Simple Monetary Rule, If the Inflation Rate Is

question 21

Multiple Choice

Using the simple monetary rule, if the inflation rate is 2 percent below the target inflation rate and the marginal product of capital is 1 percent, the Federal Reserve will:

• A) lower the target rate by 2 percent.
• B) raise the interest rate by 1 percent.
• C) lower the interest rate by 1 percent.
• D) lower the discount rate by 1 percent.
• E) Not enough information is given.

---

Definitions:

F. Skinner

B.F. Skinner was an influential American psychologist known for his work in behaviorism, particularly the development of the theory of operant conditioning.

Albert Bandura

A psychologist who is well-known for his work on social learning theory and the concept of self-efficacy.

Interactionist Approach

A theoretical perspective that emphasizes the combined effects of both individual characteristics (such as genetic traits) and environmental factors (such as societal influences) on human behavior.

Self-Efficacy

Refers to an individual's belief in their own ability to complete tasks and reach goals.