The Taylor rule
A) is a rule stating that money should grow at a constant rate.
B) is not considered to be a practical policy rule for central banks to follow.
C) dictates that the central bank's target interest rate be responsive to real economic activity and to inflation.
D) dictates that the nominal interest rate stay constant in the long run.
C
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If the actual money multiplier equals the potential money multiplier and if the Fed wishes to reduce the money supply by $1 million when the reserve ratio is 20 percent, then the Fed should
A) sell $200,000 of government securities. B) sell $500,000 of government securities. C) buy $200,000 of government securities. D) buy $500,000 of government securities.
If Slovenia is a small country in world trade terms, then if it imposes a large series of tariffs on many of its imports, this would
A) have no effect on its terms of trade. B) improve its terms of trade. C) deteriorate its terms of trade. D) decrease its marginal propensity to consume. E) increase its exports.
When institutional money managers use their computers to decide on large sales or purchases in the stock market, they are employing
a. the herd instinct. b. the bandwagon effect. c. program trading. d. stock watering.
In the markets for goods and services in the circular-flow diagram, households are buyers and firms are sellers
a. True b. False Indicate whether the statement is true or false