According to the Taylor rule, the Fed should set the target for the federal funds rate equal to the sum of the equilibrium real federal funds rate, the current inflation rate, one-half times the ________, and one-half times the ________
A) interest rate gap; inflation gap B) inflation gap; output gap
C) interest rate gap; output gap D) unemployment gap; government-spending gap
B
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Jane was a partner at a law firm earning $223,000 per year. She left the firm to open her own law practice. In the first year of business she generated revenues of $347,000 and incurred explicit costs of $163,000 . Jane's economic profit from her first year in her own practice is
a. -$39,000. b. $124,000. c. $163,000. d. $184,000.
A perfectly competitive firm facing a price of $10 decides to produce 100 units. If its marginal cost of producing the last unit is $12 and it is seeking to maximize profit, the firm should:
A. shut down. B. produce more units. C. produce fewer units. D. continue producing 100 units.