For this question, assume that the Fed sets monetary policy according to the Taylor rule. Suppose current U.S. macroeconomic conditions are represented by the following: ? < ??* and u > un. Given this information, we would expect that the Fed will
A) implement a monetary contraction.
B) implement a monetary expansion.
C) maintain its current stance of monetary policy.
D) more information is need to answer this question.
B
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When the central bank is focusing on internal balance, their main target in the economy is
A) a desired level of real GDP. B) a balance of payments equilibrium. C) a certain level of real money balances. D) reducing government debt.
Economic takeoff:
A. occurs when development becomes self-sustaining. B. will eventually occur in all developing countries. C. typically occurs in the absence of foreign investment. D. has yet to occur in any developing country.
If a country runs a current account surplus and national private savings equals domestic investment, then the combined governmental accounts
A) must be balanced. B) must be positive. C) must be negative. D) could be either negative or positive, depending on the net international investment position.
If a firm is NOT forced to pay for external costs, it will
A) continue to overproduce the good. B) continue to under produce the good. C) request a subsidy from the government. D) raise prices.