Assuming the Fed is following the Taylor Rule, if inflation is 3 percent, target inflation is 2 percent, and output is 1 percent above potential, what would you predict would be the Fed funds rate target?
A. 5 percent
B. 5.5 percent
C. 4 percent
D. 6 percent
Answer: D
You might also like to view...
A local pizzeria raised its price from $9 to $11 for each pizza and the sales of its pizza decreased from 150 to 100 per day. What is the price elasticity of demand in this case?
A) 1/2 B) -2 C) -1/2 D) 2
In the foreign exchange market, the quantity U.S. dollars demanded is a function of:
A) the amount of imports and the level of capital outflows. B) the amount of exports and the level of capital outflows. C) the amount of exports and the level of capital inflows. D) none of the above.
A decrease in the number of workers hired by a firm could result from
A) an increase in the marginal product of labor. B) an increase in the marginal revenue product of labor. C) an increase in the real wage. D) a decrease in the real wage.
Refer to the graph shown. A quantity restriction of QR will:
A. create excess demand represented by Q2 ? QR. B. reduce quantity supplied to Q2. C. reduce quantity supplied to QR. D. have no effect on quantity supplied.