Which of the following describes the relationship between the actual federal funds rate and that suggested by Taylor's rule following the recovery from the 2001 recession?
A) The federal funds rate was above that suggested by Taylor's rule.
B) The federal funds rate was below that suggested by Taylor's rule.
C) The federal funds rate was about equal to that suggested by Taylor's rule.
D) There was not a clear relationship between the federal funds rate and that suggested by Taylor's rule.
B
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The nominal interest rate is approximately equal to the real interest rate minus the inflation rate
Indicate whether the statement is true or false
Assume two firms are currently competing in a market. If one of the two firms wants to try to eliminate the other firm as a competitor, should it undertake a strategy of limit pricing or predatory pricing? Why? In addition, describe the conditions
under which the strategy you have selected will be most successful.