According to the Taylor rule, the Fed should set the target for the federal funds rate equal to the sum of the equilibrium real federal funds rate, the current inflation rate, one-half times the ________, and one-half times the ________
A) interest rate gap; inflation gap
B) interest rate gap; output gap
C) inflation gap; output gap
D) unemployment gap; government-spending gap
Answer: C
You might also like to view...
When the borrowing constraint is binding, ________
A) wealth is zero B) current consumption is lower than future consumption C) future consumption is lower than current consumption D) consumption smoothing is not possible
The AFL-CIO merger in 1955 revolutionized union practices
Indicate whether the statement is true or false
Stealth bank has deposits of $700 million. It holds reserves of $20 million and has purchased government bonds worth $350 million. The bank's loans, if sold at current market value, would be worth $600 million. What does Stealth bank’s net worth equal?
a. $120 million b. $270 million c. $1.02 billion d. $970 million
(Table: Consumer Price Index) Refer to the CPI values in the table for the years 2005 to 2010. In which year(s) did the country experience disinflation?
What will be an ideal response?