Suppose the actual federal funds rate is below the rate implied by a particular inflation goal. In this situation, the Taylor rule implies that
A) monetary policy is expansionary.
B) monetary policy is contractionary.
C) monetary policy is neither expansionary or contractionary.
D) fiscal policy is contractionary.
A) monetary policy is expansionary.
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The figure illustrates the demand for magazines. Newsagents will maximize their total revenue when they ________
A) sell 375 magazines a day B) sell as many magazines as they can C) charge $2.50 a magazine D) sell 750 magazines a day
Which of the following is not true regarding "exchange rate indexes?"
A) They will all show the same general trends (i.e., appreciation or depreciation). B) Neither economic theory nor practice gives a clear indication of which exchange rate is best. C) For short-term movements, there can be large differences across exchange rate indexes. D) Exchange rate indexes are used to measure the average value of a currency relative to several other currencies.
Expected value represents the average of all outcomes if one were to undertake the risky event many times over and over again
What will be an ideal response?
Describe the three basic tools used by the Fed to change the money supply. Which of these tools is most relied on in practice? Least relied on? Why?