Which of the following is NOT a basis for the Taylor-rule guideline for how the Federal Reserve should set its target value for the federal funds rate?
A) the current deviation of the actual inflation rate from the Fed's inflation objective
B) the gap between actual real GDP and a measure of potential real GDP
C) an estimated long-run real interest rate
D) the present deviation of the actual unemployment rate from the Fed's unemployment objective
Question 2
Which of the following statements is true?
A) There always exists some amount of unemployment in an economy.
B) The unemployment in an economy normally increases at times of expansion and decreases at times of contraction.
C) In almost every economy, each job opening is instantly filled by a qualified worker.
D) The unemployment rate in an economy is constant over the long run.
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