Which of the following is NOT a basis for the Taylor-rule guideline for how the Federal Reserve should set its target value for the federal funds rate?
A) the current deviation of the actual inflation rate from the Fed's inflation objective
B) the gap between actual real GDP and a measure of potential real GDP
C) an estimated long-run real interest rate
D) the present deviation of the actual unemployment rate from the Fed's unemployment objective
D
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The difficulty of ascertaining the right second-best trade policy to follow
A) reinforces support for the third-best policy approach. B) reinforces support for increasing research capabilities of government agencies. C) reinforces support for abandoning trade policy as an option. D) reinforces support for free-trade options. E) reinforced support for the domestic market failure argument.
Suppose the required reserve ratio is 0.1 and Linda deposits $4,000 in cash at the College State Bank. If the bank held no excess reserves before Linda's deposit and now increases its reserves by $500, which of the following is true? a. The bank must have lent out an additional $4,000. b. $500 is the value of the bank's required reserves
c. The bank now has excess reserves of $100. d. Both the bank's assets and its liabilities rise by $500. e. The bank now has $500 in excess reserves.