Assuming the Simple Taylor Rule for Dictating the Federal Funds

question 97

Multiple Choice

Assuming the simple Taylor rule for dictating the federal funds rate, when the actual federal funds rate deviates from the suggested rate, it can be explained by:

• A) bad monetary policy.
• B) discretionary fiscal policy.
• C) a richer version of the Taylor rule.
• D) poorly informed monetary policy.
• E) poorly informed fiscal policy.

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Definitions:

Postcategorization

The process or practice of reevaluating and possibly redefining categorizations, often in the context of social identities or classifications.

Precategorization

The early or initial process of classifying or sorting objects, ideas, or information into categories, often before more detailed analysis.

Robbers Cave

A landmark social psychology experiment by Muzafer Sherif that illustrated how intergroup conflict can arise from competition for resources and how it can be overcome by working towards shared goals.

Superordinate Goals

Shared objectives that transcend individual or group interests, requiring cooperative efforts to achieve.