An increase in money demand will shift the

If the Fed follows the Taylor rule and the economy goes into a recession, the Fed would

A) raise the federal funds rate B) reduce tax rates. C) increase government expenditures. D) lower the federal funds rate. E) None of the above answers is correct.

Which lag stems from the fact that it takes time for people and firms to react to a policy change, to acquire or reduce loans, and to change their level of consumption?

A) the implementation lag B) the recognition lag C) the market lag D) the impact lag