Using Taylor's rule, when the equilibrium real federal funds rate is 3 percent, the positive output gap is 2 percent, the target inflation rate is 1 percent, and the actual inflation rate is 2 percent, the nominal federal funds rate target should be

Believers in a fixed-rule approach to stabilization policy propose that

a. Congress should balance the high employment budget. b. the Fed should keep the money supply growth constant. c. the economy be stabilized by automatic mechanisms. d. All of the above are correct.

Goods and services purchased from international sources are

A. Net imports. B. Net exports. C. Exports. D. Imports.