Using the Taylor rule, if inflation is 3 percent, desired inflation is 2 percent, and output is 2 percentage points below potential, the Fed should target a federal funds rate of:
A. 3.5.
B. 4.5.
C. 6.5.
D. 3.0.
Answer: B
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Using the chained-dollar method to calculate real GDP, real GDP is calculated by
A) valuing the current output at last year's real GDP prices. B) valuing the current output at current year prices. C) averaging the growth of output from one year to the next when the growth rates are calculated using this year's prices and using last year's prices. D) either A or C, depending which gives the larger value for real GDP. E) averaging the value of current output valued using base year prices and current output valued using current year prices.
Refer to Table 11-3. Use the table above to calculate the annual growth rate in GDP. Also calculate the total percentage change in the growth from 2013 through 2016
Explain the difference between the average annual growth rate in real per capita GDP from 2013 through 2016 and the total percentage change in growth from 2013 and 2016.
Suppose the real exchange rate is 10, the domestic price level is 8, and the foreign price level is 4
(a) What is the nominal exchange rate? (b) Suppose the real exchange rate rises by 10%, the inflation rate in the domestic country is 6%, and the inflation rate in the foreign country is 4%. By what percentage does the nominal exchange rate change? (c) Suppose the nominal exchange rate rises by 5%, the real exchange rate rises by 8%, and domestic inflation is 3%. What is the foreign inflation rate?
Consider two situations: In situation A the production of widgets is monopolized by a single firm. In situation B the production of widgets is perfectly competitive. In both situations the supply of labor to widget makers is infinitely elastic at a wage of w. Which of the following statements is true?
a. The marginal value product of labor will be the same in the two cases. b. The marginal value product of labor is higher in case B than in case A. c. The marginal value product of labor is higher in case A than in case B. d. From the information given it is not possible to make a definite statement about the marginal value product of labor.