Given the following formula for the Taylor rule:Target federal funds rate = natural rate of interest + current inflation + 1/2(inflation gap) +1/2(output gap) If the inflation rate in the economy were to fall by 2% below the target inflation rate, the target federal funds rate would:
A. Remain at 2.5%.
B. Increase by 1.0%.
C. Decrease by 3.0%.
D. Decrease by 1.0%.
Answer: C
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Although digital storage costs have declined sharply in the past few years, many universities and companies still have limited storage space for email messages and impose a fixed limit on the amount of file storage space per user
May we view this as a common property resource problem, and do the fixed limits resolve the problem? A) Yes, the storage space used by one person is not available to another person, and the storage limit is a type of quota that allocates the property rights to the storage space. B) Yes, the storage space used by one person is not available to another person, and the storage limit represents a form of single-person ownership that resolves the common property resource problem. C) No, one person's use of the storage space does not have an impact on other people, so this is not a common property resource problem. D) This is an example of a common property resource problem, but the fixed limits on storage space do not resolve the problem.
With cost-push inflation in the short run, there will be a(n) ________.
A. leftward shift in the aggregate demand curve B. decrease real GDP C. decrease in unemployment D. increase in real GDP
vertical S curve at Q = 1
What will be an ideal response?
We shouldn't be concerned about U.S. currency held abroad because
A. it represents an interest-free loan to the United States. B. foreigners can't spend it in their own countries. C. foreigners use it to buy U.S. bonds. D. the currency will never return to the United States.