The Taylor rule states that if real GDP rises 1 percent above potential GDP the federal funds rate should be raised, relative to the current inflation rate, by ______.
a. 0.5%
b. 1%
c. 2%
d. 4%
a. 0.5%
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Water is considered a necessity. So, is the demand for water elastic or inelastic?
What will be an ideal response?
Capital outflows occur if:
A) domestic interest rates are higher than foreign interest rates. B) domestic interest rates are lower than foreign interest rates. C) domestic and foreign interest rates are the same. D) none of the above.
In the steady state of Solow's exogenous growth model, an increase in the savings rate
A) increases output per worker and increases capital per worker. B) increases output per worker and decreases capital per worker. C) decreases output per worker and increases capital per worker. D) decreases output per worker and decreases capital per worker.
Matty and Rudy are the same age, live in the same town, and hold similar jobs a similar distance from their respective homes. They are so similar, in fact, that to the insurance company, they look the same and are offered the same insurance options. However, Matty has never been a particularly good driver and so buys a lot of auto insurance. Rudy, on the other hand, takes pride in being an excellent driver and so only carries the minimum insurance required. This example illustrates the potential for :
A. adverse selection. B. diversification. C. risk pooling. D. risk aversion.