1. According to the Taylor Rule, if the output gap rises by 1% and inflation rises by 2%, then the federal funds rate should rise by
A. 2.0%.
B. 2.5%.
C. 3.0%.
D. 3.5%.
2. According to the Taylor Rule, if inflation rises by 2%, then the targeted interest rate should rise by more than 2%.
True
False
3. According to the Taylor Rule, if the output gap rises by 2% and the inflation gap rises by 1%, then the real federal funds rate should rise by
A. 1.5%.
B. 2.0%.
C. 2.5%.
D. 3.0%.
4. According to the Taylor Rule, if the output gap falls by 2% and the inflation gap rises by 1%, then the real federal funds rate should be
A. lowered by 1.0%.
B. lowered by 0.5%.
C. left unchanged.
D. raised by 1.0%.
5. According to the Taylor Rule, if the output gap rises by 3% and inflation falls by 1%, then the federal funds rate should
A. fall by 2%.
B. fall by 1%.
C. remain unchanged.
D. rise by 1%.