Suppose the equilibrium real federal funds rate is 3 percent, the target rate of inflation is 3 percent, the current inflation rate is 1 percent, and real GDP is 8 percent below potential real GDP
If the weights for the inflation gap and the output gap are both 1/2, then according to the Taylor rule the federal funds target rate equals
A) -3 percent. B) -1 percent. C) 3.5 percent. D) 7 percent.
B
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In the absence of any legally binding enforcement mechanism, individual cartel producers may find it advantageous to cheat on the agreements and engage in secret price concessions
a. true b. false
Suppose the market for autoworkers is initially in equilibrium, but then suppose the automakers improve working conditions at the plants. What happens in the market for autoworkers?
A) The equilibrium wage rate will increase and the equilibrium quantity of labor will decrease. B) The equilibrium wage rate and the equilibrium quantity of labor will both increase. C) The equilibrium wage rate and the equilibrium quantity of labor will both decrease. D) The equilibrium wage rate will decrease and the equilibrium quantity of labor will increase.