Given the following formula for the Taylor rule:Target federal funds rate = natural rate of interest + current inflation + 1/2(inflation gap) +1/2(output gap) if the current rate of inflation is 4%, natural rate of interest is 2%, and the target rate of inflation is 2%, and output is 3% above its potential, the target federal funds rate would be:

Government invention is required to solve externality problems if ________

A) transaction costs associated with private negotiations are low B) the number of people affected by the externality is small C) the number of people affected by the externality is large D) property rights are clearly defined

If there is a "long and variable time lag" between when a change in monetary policy is instituted and when it impacts aggregate demand and output, this will

a. make it easier for the Fed to properly time changes in monetary policy. b. make it more difficult for the Fed to properly time changes in monetary policy. c. not affect the Fed's ability to time monetary policy changes correctly. d. make it easier for the Fed to control inflation and achieve price stability.