If real GDP is 2% below potential GDP, and the inflation rate is 1%, then according to the Taylor rule, the Fed should make the real federal funds rate:
A. Decrease by 1.5%
B. Decrease by 3%
C. Increase by 3%
D. Decrease by 1%
A. Decrease by 1.5%
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Classical economists who allow for shocks other than productivity shocks to affect the economy use ________ models rather than RBC models
A) Keynesian B) monetarist C) nonlinear D) DSGE
GDP includes
Use the sticky-wage theory of aggregate demand to explain the short-run Phillips curve
(Last Word) In response to the Great Recession, the federal government engaged in significant deficit-funded spending. While it kept the recession from getting worse, and did result in some positive economic growth, it did not fully achieve the desired
result. Which of the following best explains why the fiscal policy actions fell short of their objective? A. Despite the fiscal stimulus, aggregate demand continued to shift to the right. B. The fiscal stimulus caused a significant leftward shift of aggregate supply. C. Offsetting monetary policy caused the aggregate demand to remain virtually unchanged, meaning that all gains in output came from aggregate supply shifts. D. The fiscal stimulus shifted aggregate demand to the right, but not enough to restore full employment.