Using the Taylor rule, if the current inflation rate equals the target inflation rate and real GDP equals potential GDP, then the federal funds target rate equals the
A) current discount rate.
B) current inflation rate.
C) real equilibrium federal funds rate.
D) current inflation rate plus the real equilibrium federal funds rate.
Answer: D
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If inflation is the major problem in the economy, which of the following would be an appropriate monetary policy response?
a. decreasing reserve requirements b. increasing the discount rate c. buying government bonds d. none of the above
The Secretary of Labor states that wage rates in the country have risen by 2 percent this past year. The head of a local labor union states that wage gains have not kept pace with the 3 percent rate of inflation. The Secretary's statement is a ___________ economic statement, and the labor head's statement is a(n) _____________ economic statement
a. normative; normative b. normative; positive c. positive; normative d. positive; positive e. proper; improper
Which of the following does NOT cause a shift in demand?
A) change in income B) change in tastes C) change in the price of the good D) change in the price of a related good
Exhibit 30-3 Costs of Eliminating:Firm A Firm B Firm C 1st ton of pollution$ 30 $ 50 $ 600 2nd ton of pollution$ 70 $ 90 $ 700 3rd ton of pollution$125 $150 $ 900 4th ton of pollution$200 $250 $1,300 Refer to Exhibit 30-3. What is the cost to Firm A of eliminating 2 tons of pollution?
A. $100 B. $200 C. $700 D. $425 E. $1,500