According to the Taylor rule, if inflation equals 4 percent and there is a recessionary gap equal to 4 percent of potential output, the Fed will set a real interest rate of ________ percent and a nominal interest rate of ________ percent.
A. 1; 4
B. 2; 4
C. 1; 5
D. 4; 4
Answer: C
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When federal government spending amounts to less than tax revenues, the federal government runs a budget deficit
Indicate whether the statement is true or false
The real wage rate measures the
A) quantity of goods and services that an hour of work will buy. B) average weekly earnings in dollars of a worker. C) dollar value of an hour of work. D) dollar value of what a worker could earn in another job.
In the private placement market the term "due diligence" means
A) an investor finding an honest agent from whom to buy a bond. B) a borrower finding an honest agent to sell its bonds. C) conducting a credit analysis of the borrower. D) an agent tailoring terms of the placement to meet investor needs.
Residents of Leon County have developed a strong liking for barbeque pork sandwiches. Residents of Bay County buy the same amount of barbeque pork sandwiches but believe beef sandwiches are just about as good. From this, we can infer that
a. residents of Leon County will not care what the price of barbeque pork sandwiches is. b. compared to residents of Leon County, residents of Bay County will have a smaller price elasticity of demand for barbeque pork sandwiches. c. compared to residents of Leon County, residents of Bay County will have a larger price elasticity of demand for barbeque pork sandwiches. d. residents of Leon County will increase their purchases by a larger amount for beef sandwiches than residents of Bay County in response to a "50 cents off" sale on beef sandwiches.