If the actual federal funds rate is substantially above the appropriate rate implied by the Taylor rule, this indicates that
a. monetary policy is overly expansionary and a shift toward a more restrictive policy would be appropriate.
b. monetary policy is too restrictive and a shift to a more expansionary policy would be appropriate.
c. monetary policy is unable to influence interest rates, and therefore it is unable to influence either output or prices.
d. current monetary policy is on target and no policy shifts should be made.
B
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The expression "There's no such thing as a free lunch" means that
a. services may be free, but goods are never free b. even if it has a price of zero, a good or service has a cost c. charitable organizations should not serve free lunches to the poor d. poor people are really the ones who pay for their allegedly free lunches e. someone has to pay the market price for a good or service
The invention of machinery that can double the amount of gold extracted from raw ore will likely: a. raise the world price of gold to pay for the new machinery
b. lower the world price of gold because any given amount can now be produced more cheaply. c. raise the world price of gold because miners' wages must double as their productivity doubles. d. lower the world price of gold only if new mining companies are not allowed to enter the industry.
"As the price of personal computers continues to fall, demand increases." This headline is inaccurate because:
A. the statement is backwards: increased demand leads to lower prices. B. a falling price of personal computers increases the quantity demanded, not demand. C. a change in the price of personal computers shifts the demand curve. D. a change in the price of personal computers shifts the supply curve.
The run up in gasoline prices between 1999 and 2007
A. still had them much below their long-term inflation-adjusted average. B. put them about the same as their long-term inflation-adjusted average. C. still had them slightly below their long-term inflation-adjusted average. D. put them much above their long-term inflation-adjusted average.