Suppose that the Fed has decided to utilize the Taylor rule to implement monetary policy. If the actual federal funds rate target is presently below the level specified by the Taylor rule and has been lower then this level for several weeks, then this would be a signal that
A. the Fed should halt efforts to target the money supply.
B. the Fed should switch to targeting the money supply instead of the federal funds rate.
C. monetary policy is very contractionary.
D. monetary policy is very expansionary.
Answer: D
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The aggregate demand curve is downward sloping for all of the following reasons EXCEPT for the:
A. effect of inflation on the value of money. B. impact of inflation on the consumer price index (CPI). C. response of the Fed to inflation through its policy reaction function. D. distributional impact of inflation on spending.
Refer to Table 2.3. What can be observed about the given resources?
A) Capital is fixed. B) Capital is variable. C) Capital and labor are both fixed. D) Labor is fixed.
If a revenue-maximizing firm is told that the price elasticity of demand is equal to one, it should:
a. raise prices 1 percent. b. lower prices 1 percent. c. raise prices until the elasticity becomes very high. d. keep the price where it is. e. lower prices until the elasticity becomes very high.
During World War II government expenditures increased almost five-fold and output almost doubled
a. True b. False Indicate whether the statement is true or false