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 contractionary.
B. fiscal policy is contractionary.
C. monetary policy is neither expansionary or contractionary.
D. monetary policy is expansionary.
Answer: D
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How does a higher level of saving lead to higher GDP in the future?
(A) Because increased savings will divert money that would be spent on imported goods in the current year. (B) Because more capital is available for investment, leading to higher output through capital deepening. (C) Because a higher national savings rate encourages immigration and expands the labor force. (D) Because the government taxes savings accounts to pay for education.
Government policies that help increase the skills of the workforce or that subsidize employment more directly would
a. decrease employment and increase output b. increase employment and decrease output c. increase employment and increase output d. increase unemployment and decrease output e. increase unemployment and increase output