The Fed cannot predict the effects of open market operations with perfect accuracy because of
a. changes in people's desires for cash.
b. foreigners desire to hold U.S. dollars.
c. banks' desires to hold excess reserves.
d. All of the above are correct.
d
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The Taylor rule implies that the Fed should set the federal funds target based on which of the following?
A) the proportionate gap between actual real GDP and a measure of potential real GDP B) the current deviation of the actual inflation rate from the Fed's inflation objective C) an estimated long-run real interest rate D) all of the above
What is fiscal policy, who makes it, and what is it designed to influence?
What will be an ideal response?
Assume that seigniorage and the government's primary deficit are both zero. A change in the debt-to-GDP ratio depends on just
A) the rate of inflation and total factor productivity. B) the growth rate of real GDP and the real interest rate. C) the growth rate of the money supply and the nominal interest rate. D) the growth rate of nominal GDP and the rate of inflation.
A ticket to an Eric Clapton concert costs $45 . If you have a ticket, you can "scalp" it (sell it illegally) for $75 . To a ticket holder, the opportunity cost of actually attending the concert is
a. $45. b. $50. c. $75. d. $115.