Suppose the equilibrium real federal funds rate is 3 percent, the target rate of inflation is 3 percent, the current inflation rate is 1 percent, and real GDP is 8 percent below potential real GDP. If the weights for the inflation gap and the output gap
are both 1/2, then according to the Taylor rule the federal funds target rate equals
A) -3 percent.
B) -1 percent.
C) 3.5 percent.
D) 7 percent.
Answer: B
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Refer to Figure 22-4. Suppose the per-worker production function in the figure above represents the production function for the U.S. economy
If the United States decided to cut its support of university research in half, this would cause a movement from A) B to D. B) B to E. C) B to C. D) B to A.
Which central coordination task has claimed the most attention of central planners?
a. Output selection b. Production planning c. Distribution d. Rationing
Which of the following is not an obstacle to development?
A. Overpopulation B. Excessive investment C. Political instability D. Corruption
The profit-maximizing monopolist will never operate in a price range over which
A) the demand curve slopes downward. B) demand is inelastic. C) P > MR. D) P > MC.