Suppose the actual federal funds rate is below the rate implied by a particular inflation goal. In this situation, the Taylor rule implies that
A) monetary policy is expansionary.
B) monetary policy is contractionary.
C) monetary policy is neither expansionary or contractionary.
D) fiscal policy is contractionary.
A)
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The self-correcting property of the economy means that output gaps are eventually eliminated by:
A. increasing or decreasing potential output. B. government policy. C. decreasing inflation only. D. increasing or decreasing inflation.
"To find the economy's marginal social benefit curve for a public good, we sum the individual marginal benefit curves horizontally." True or false? Explain
What will be an ideal response?
In the process described as Schumpeterian economic growth (involving Schumpeter's ideas about growth),
(a) recessions are the object of countercyclical policy designed to minimize the waste of unemployed labor and other resources. (b) expansions are considered wasteful because of the tendency for inflation to be generated near the cyclical peaks. (c) recessions are considered to be useful cleansing devices for abandoning inefficient uses of economic resources. (d) depressions are considered to be necessary to maintain greater equality of wealth and income over time.
If a country's production possibilities curve gets more bowed out over time, it is an indication that
A) technological change has taken place. B) society is learning to use its resources more efficiently. C) the quantity of labor and capital have increased. D) resources have become more highly specialized.