According to the Taylor rule, if inflation equals 3 percent and there is a recessionary gap equal to 3 percent of potential output, the Fed will set a real interest rate of ________ percent and a nominal interest rate of ________ percent.
A. 1; 3
B. 3; 3
C. 1; 4
D. 2; 4
Answer: C
You might also like to view...
Using the midpoint method, if the price of an airline ticket from Orlando to Pittsburgh falls from $275 to $238, the percentage change in price is
A) 1442 percent. B) 14.42 percent. C) 15.54 percent. D) 13.45 percent. E) 68.00 percent.
If the Costa Rican colone is expected to depreciate in the future, it will temporarily appreciate as people move to take advantage based on this expectation
Indicate whether the statement is true or false
The analytical framework in which two or more firms compete for certain payoffs that depend on the strategy that the others employ is
A) game theory. B) the concentration ratio. C) a horizontal merger. D) network effect.
Depreciation of the real exchange rate:
A. makes U.S. exports less expensive to foreigners. B. makes U.S. exports more expensive to foreigners. C. means a basket of U.S. goods would exchange for more foreign goods. D. means an appreciation of the nominal exchange rate.