According to the Taylor rule, when real GDP is equal to potential GDP, and the inflation rate is equal to its target rate of two percent, the Federal funds rate should be:
A. 2 percent and this implies a real interest rate of 0 percent
B. 2 percent and this implies a real interest rate of 4 percent
C. 4 percent and this implies a real interest rate of 2 percent
D. 4 percent and this implies a real interest rate of 4 percent
C. 4 percent and this implies a real interest rate of 2 percent
You might also like to view...
Suppose the prices of a pair of jeans, a shirt, and a tie are $30, $20, and $10 respectively. Which of the following statements is true in this context?
A) The opportunity cost of buying a pair of jeans is 2 ties. B) The opportunity cost of buying a tie is 3 pairs of jeans. C) The opportunity cost of buying a tie is 2 shirts. D) The opportunity cost of buying a shirt is 2 ties.
When a tax is placed on sellers, the actual incidence:
A. falls solely on the seller. B. falls solely on the buyer. C. may be shared between the seller and buyer. D. is higher because it is being placed on the seller.
According to the law of demand, if:
a. product price increases, quantity demanded will decrease. b. consumer income increases, quantity demanded will increase. c. product price increases, quantity demanded will increase. d. consumer income increases, quantity demanded will decrease. e. supply increases, demand will increase.
The production techniques available to real-world firms are constantly changing because of learning by doing and technological change.
Answer the following statement true (T) or false (F)