According to the Taylor rule, if the inflation rate in the last year was 2% and output was equal to its full-employment level, the nominal Fed funds rate should be
A) 3%.
B) 4%.
C) 5%.
D) 6%.
D
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Information asymmetry is a problem when:
A. a buyer and seller have aligned incentives. B. a buyer and seller have opposing incentives. C. a market is highly efficient. D. a market is highly inefficient.
According to the ratings given by Moody's and Standard and Poor's, _____ bonds are corporate bonds that carry the lowest risk and offer a lower yield
a. A+ b. white collar c. AA d. blue chip e. AA+
Jim transfers money from his money market account to his savings account. This action
a. reduced M1 and increases M2. b. increases M1 and reduces M2. c. has no effect on M1 or M2. d. increases M1 and M2.
Much of the U.S. government’s budget is tied to the Consumer Price Index (CPI), including Social Security benefits. Assume that the Social Security Administration (SSA) pays $980 million in benefits this year. If the CPI overstates inflation by 1 percent, how much money does the SSA stand to lose due to overpayments the following year?
a. $98,000 b. $980,000 c. $9.8 million d. $98 million