How might strict adherence to the Taylor rule discourage cost-push inflation?
What will be an ideal response?
Cost-push inflation cannot persist without repeated increases in AD to counter declines in output. Constrained by the Taylor rule, monetary policy must tighten as the inflation rate rises, even when that means an increase in the (absolute value of the) output gap. Moreover, public knowledge of the central bank's commitment to an inflation target causes upward shifts of the aggregate supply curve to be relatively infrequent and small.
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The above table presents the balance sheet of the TBK commercial bank. If the desired reserve ratio is 25 percent, what is this bank's desired reserves?
A) $120 B) $150 C) $175 D) $30
A change in the income of buyers will normally change demand
a. True b. False Indicate whether the statement is true or false
Cited in the text, one obvious example of the effect on power politics that comes from reducing poverty is the increasing influence of
a. Brazil. b. India. c. China. d. Russia.
When there is a shift in autonomous expenditure, why is there a multiple expansion of income and real GDP? Trace the multiplier effect through the first four rounds when there is an increase in autonomous expenditure of $40 billion and the marginal propensity to consume is 0.75.
What will be an ideal response?