According to the Taylor rule:
A. if real GDP rises by 2 percent above potential GDP, the Fed should raise the real federal
funds rate by 1 percentage point.
B. when real GDP is equal to potential GDP and inflation is equal to its target of 4 percent, the
federal funds rate should be kept at 2 percent.
C. if inflation falls by 1 percentage point below its target of 2 percent, then the Fed should
raise the real federal funds rate by one-half a percentage point.
D. all of these are appropriate Fed actions.
A. if real GDP rises by 2 percent above potential GDP, the Fed should raise the real federal
funds rate by 1 percentage point.
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For certain public projects such as building a dam on a river or a bridge to an island, what procedure is a government likely to use to determine what quantity of a public good should be supplied?
A) It hires economists to estimate the market demand for the product. B) It evaluates the costs and benefits of producing the good. C) It takes a vote in Congress. D) It conducts public surveys to determine if consumers want the product.
The demand curve for bonds has the usual downward slope, indicating that at ________ prices of the bond, everything else equal, the ________ is higher
A) higher; demand B) higher; quantity demanded C) lower; demand D) lower; quantity demanded
Assume that the government increases spending and finances the expenditures by borrowing in the domestic capital markets. If the nation has low mobility international capital markets and a flexible exchange rate system, what happens to the real GDP and net nonreserve-related international borrowing/lending in the context of the Three-Sector-Model?
a. Real GDP rises, and net nonreserve-related international borrowing/lending becomes more positive (or less negative). b. Real GDP rises, and net nonreserve-related international borrowing/lending becomes more negative (or less positive). c. Real GDP falls, and net nonreserve-related international borrowing/lending becomes more positive (or less negative). d. Real GDP and net nonreserve-related international borrowing/lending remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.
Which of the following would likely result as a consequence of rent controls?
A) a reduction in the rate of construction of rental housing units B) unimproved buildings and apartment complexes C) limits on tenant mobility D) All of the above are correct.