The Taylor rule
A) is a rule stating that money should grow at a constant rate.
B) is not considered to be a practical policy rule for central banks to follow.
C) dictates that the central bank's target interest rate be responsive to real economic activity and to inflation.
D) dictates that the nominal interest rate stay constant in the long run.
C
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In a persisting demand-pull inflation,
A) aggregate supply decreases and aggregate demand increases. B) aggregate demand decreases and aggregate supply decreases. C) aggregate demand increases and potential GDP decreases. D) aggregate supply increases and aggregate demand increases. E) None of the above answers is correct.
At Tony's Restaurant, the quantity of large pizzas sold is 200 at the unit price $15. Suppose the price elasticity of demand for pizzas by the initial value method is 1.5, and you would like to increase the quantity sold to 250. Then the new price must be:
A. $13. B. $12.50. C. $11.50. D. $11.25.