According to the Taylor rule ________
A) expectations are formed in an adaptive fashion
B) the central bank should set its federal funds rate target by a formula that puts weight on both output and inflation gaps
C) a constant growth rate rule for money should be adopted
D) expectations should be formed consistent with the model of rational expectations
B
You might also like to view...
If people's expectations about future income improve so they think their future income will be higher than previously believed, then the AD curve
A) will not shift, but potential GDP will increase. B) will shift leftward because people will spend less now. C) will shift rightward because people will increase spending now. D) and the AS curve will both shift leftward because people will increase their saving. E) will not change until income actually rises.
The fact that long-run growth in the U.S. has been relatively stable is consistent with the ______ model
a. endogenous growth. b. supply-side. c. Keynesian. d. neoclassical growth. e. none of the above.
Economic profits in a competitive industry are signals that
a. attract new firms into the industry b. prevent firms from adopting newer technologies c. encourage existing firms to continue to operate inefficiently d. indicate that business conditions are improving e. cause the industry's resources to be used in lower valued uses
A government policy aimed at protecting people against the risk of adverse events is called