According to the Taylor rule, ceteris paribus, if the actual inflation rate is below the Fed's target inflation rate, and if the growth rate of real GDP is below the long-run average growth rate, then Select one: O a. the Fed would be expected to increase the Federal Funds Rate. O b. the Fed would be expected to decrease the Federal Funds Rate. O c. the Fed would be expected to decrease the money supply. O d the Fed's behavior could not be predicted without more information.

According to the Taylor rule, ceteris paribus, if the actual inflation rate is below the Fed's target inflation rate, and if the growth rate of real GDP is below the long-run average growth rate, then Select one: O a. the Fed would be expected to increase the Federal Funds Rate. O b. the Fed would be expected to decrease the Federal Funds Rate. O c. the Fed would be expected to decrease the money supply. O d the Fed's behavior could not be predicted without more information.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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In regard to monetary policies, nonactivists have various proposals. True or False: Some nonactivists believe in the Taylor rule, which suggests that the annual money-supply growth rate should be based on the growth rates of velocity and Real GDP to ensure that the price level does not fluctuate. O False O True Which of the following statements best explains the difference between the Taylor rule and the two other nonactivist rules (the constant-money growth rate rule and the predetermined-money growth rate rule)? O The Taylor rule does not take into account the stability of prices. O The Taylor rule suggests how much the money supply should grow. O The Taylor rule does not take into account the current state of the economy. O The Taylor rule is not a derivation of the equation of exchange.
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In the context of our course long run "money neutrality" has which of the following implications? O In the long run monetary stimulus increases inflation and nominal GDP, but not real GDP O All the other options O The natural rate hypothesis means that monetary policy cannot affect the natural rate of unemployment O A central bank can manage demand-driven cycles in economic activity
The economy is currently operating at point X on Graph A. How many of the following policies could the Fed implement to move the economy back to the Solow growth rate? 1) Engage in open market sales; 2) Lower taxes; 3) Increase the discount rate TT GRAPH GenPH A LEAS SEAS LRAS SRAS AD AD O A. 1 O B. 0 O C. 2 O D. 3
Assuming that all else remains constant, contractionary monetary policy causes aggregate demand to: Select one: a. rise by less than it otherwise would have and the price level to rise by less than it otherwise would have. b. fall by less than it otherwise would have and the price level to rise by less than it otherwise would have. O c. rise by more than it otherwise would have and the price level to rise by less than it otherwise would have. d. fall by more than it otherwise would have and the price level to rise by more than it otherwise would have.
Expansionary monetary policy is when: None of the statements are correct. The president and congress agree to lower interest rates. The president orders the Federal Reserve to cut income taxes. The Federal Reserve reduces the regulations hindering our business community. The Federal Reserve increases the nation's money and credit supply and raises interest rates. Moving to the next question prevents changes to this answer. O JUL 21 tv 10 ^ O
The misperceptions theory concludes that: O A. in the short run, unanticipated monetary changes are neutral but anticipated monetary changes are not neutral, B. in the short run, both anticipated and unanticipated monetary changes are not neutral. Oc. unanticipated monetary changes are not neutral in either the short run or the long run. O D. in the short run, anticipated monetary changes are neutral but unanticipated monetary changes are not neutral.
All of the following are elements in the structure of the Fed EXCEPT the a. Executive Council to the Governor. O b. Board of Governors. O c. 12 Federal Reserve Banks. O d. presidents of the 12 Federal Reserve Banks. O e. Federal Open Market Committee.
If the economy is currently experiencing 10% inflation, which Monetary Policy changes should the Federal Reserve implement (used)? Select all that apply O increase the reserve requirement O lower the reserve requirement O increase the discount rate O lower the discount rate O sell bonds on the open market O buy bonds on the open market O O O O O O
What kind of monetary policy should the Fed use if the economy is currently in the northwest area of the bullseye chart? O Expansionary. ONeither expansionary nor restrictive O Restrictive O Expansionary and restrictive
According to the Taylor rule, the federal funds target rate O a. increases; increases O b. increases; decreases Oc. decreases; increases O d. decreases; decreases as inflation increases and when GDP increases, all else equal
Suppose the current real federal funds rate in the economy is 3.0%, the current inflation rate is 1.5%, the Federal Reserve's target inflation rate is 2.0%, and the output gap is -2.0%. According to the Taylor Rule, the Federal Reserve's target federal funds rate should be Select one: O a. 3.25%. O b. 3.75%. O c. 2.5%. O d. 2.75%.