How might using the Taylor rule improve the Fed's monetary policy?
What will be an ideal response?
The Taylor rules is a formula that sets the federal funds rate according to the inflation rate and the output gap. This rule has worked well in computer simulations when it comes to avoiding excessive inflation or recessions. Given this track record, it might improve the Fed's monetary policy and make the Fed better able to avoid high inflation and recessions. It also has the advantage of inflation targeting insofar as it removes uncertainty about what will be the Fed's policy.
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Two firms sell 100% orange juice in 10 ounce bottles. The juice is only good for one week. The two firms have contracts for all the oranges produced in a large geographic area. Each firm decides how many bottles of juice to produce at the same time
This market is best described with a A) Bertrand model. B) Stackelberg model. C) monopolistic competition model. D) Cournot model.
Interest payments on the government debt depend directly on:
A. past expenditures. B. returns from government assets. C. whether debt is owed to citizens or foreigners. D. current expenditures.
The long-run aggregate supply curve shows
A. the total amount of planned production for an economy. B. the various quantities of goods consumers will purchase. C. what an economy can produce if resource prices are constant. D. that real GDP can only increase when the price level increases.
Which of the following would show a good that is relatively inelastic in supply?
a. ES < 1 b. ES = 1 c. ES ? 1 d. ES รท1