Why is it difficult to determine whether fluctuations in the target interest rate have led to business cycle fluctuations in the United States, according to the New Keynesian model?
A) Because the Federal Reserve may change the target interest rate according to economic conditions.
B) Because the target interest rate is nominal, not real.
C) Because inflation is not well measured.
D) Because money is neutral.
A
You might also like to view...
If there is an excess supply of money in the economy,
a. there is also an excess demand for money b. there is also an excess demand for bonds c. there is also an excess supply of bonds d. the interest rate will rise e. the Fed must intervene to restore equilibrium
A baker can produce two products: cupcakes and pies. The table below is the baker's production possibilities schedule:Production Possibilities ScheduleProductABCDEFCupcakes01220365681Pies1086420If the baker uses all of its resources to produce only cupcakes, then its production combination will be
A. F. B. A. C. B. D. E.