Conducting Monetary Policy So That the FF Rate = $\pi$ + 05

question 44

Multiple Choice

Conducting monetary policy so that the FF rate = $\pi$ + 0.5( $\pi$ - 2) + 0.5 (GDP gap) , where the FF rate is the nominal federal funds interest rate, $\pi$ is the annual inflation rate, and GDP gap is the percentage shortfall of real GDP from its natural level, is an example of :

• A) an active policy rule.
• B) a passive policy rule.
• C) discretionary policy.
• D) an automatic stabilizer.

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Definitions:

Modeling

The process of representing real-life systems through mathematical formulas and simulations.

Social Withdrawal

The avoidance of social interactions and situations, often due to anxiety or preference for solitude.

Transference

A phenomenon in psychoanalysis whereby patients project feelings about important people from their past onto the therapist.

Exposure Therapies

Behavioral techniques that expose individuals to anxiety- or fear-related stimuli under carefully controlled conditions to promote new learning.