Econ

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Submitted By leftyp6857
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According to the Taylor rule: if inflation rises by 1 percentage point above its target, then the Fed should raise the real Federal funds rate by one-half a percentage point. growth in the money supply should be limited to the long-run average growth rate of real GDP. the rate of money growth should be set at 4 percent per year. for every 1 percentage point that unemployment exceeds the natural rate of unemployment, there is a 2 percentage point gap between potential and actual GDP.
The demand for Federal funds is upsloping. downsloping. vertical. horizontal.
Generally, the prime interest rate: is highly inflexible downward. remains constant over long periods of time. moves in the same direction as the Federal funds rate. moves in the opposite direction as the Federal funds rate.
Which of the following statements is correct? Interest rates and bond prices vary directly. Interest rates and bond prices vary directly during inflations and inversely during recessions. Interest rates and bond prices are unrelated. Interest rates and bond prices vary inversely.
(Last Word) Other things equal, a restrictive monetary policy during a period of demand-pull inflation will: increase productivity, aggregate supply, and real output. increase the interest rate, reduce investment, and reduce aggregate demand. lower the price level, increase investment, and increase aggregate demand. lower the interest rate, increase investment, and reduce net exports.
(Consider This) The Fed is like a sponge in that it can: wash the "windows" of the banking system so that monetary policy is more transparent. wipe away inflation when used with the "soap" of fiscal policy. squeeze new reserves into the banking system, or soak up reserves if the banking reserve "bowl" is too full. clean up…...

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