The Great Depression provided significant evidence that
a. the economy always worked well on its own
b. the economy always reached full employment on its own
c. the economy may not always do well on its own
d. the notion of laissez faire was correct
e. the supporters of the classical model were correct
C
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According to the Taylor Rule, for a given inflation rate, ________
A) every percentage point increase in the inflation rate increases the federal funds rate by 1.5 percentage points B) if bank reserves double, the federal funds rate should double C) every percentage point increase in the nominal interest rate increases the federal funds rate by 1 percentage point D) if nominal output doubles, the federal funds rate should double
When the Fed conducts an open market sale, it
A) raises interest rates and increases the money supply. B) raises interest rates and reduces the money supply. C) lowers interest rates and reduces the money supply. D) lowers interest rates and increases the money supply.