Question

target rate of inflation is 2 percent, the real GDP. If the weights for the 2 percent, the aurrent inflation rate is 4 percent, and real GDP is 2 percent above potential i inflation gap and the output gap are both 1/2, then according to the Taylor rule the equals 20) ) 4 percent. B)6perennt. C)8percent. D) 10 percent. Figure 11-2 Real GDP per hour worked, YIL oductior function, Production Production function Capital per hour worked, K/L $40 60 21) Refer to Figure 11-1. Within a country, the impact of wars and revolutions and their subsequent destruction of capital is reflected in the per-worker production function in the figure above by a movement from 21) 22)_ 22) Real GDP will increase A) only if the price level rises. B) only if the quantity of final goods and services produced rises. C) only if the price level falls. D) if either the price level rises or the quantity of final goods and services produced rises. 23) Which of the following will lead to a decrease in the equilibrium interest rate in the economy? 23) A) a decrease in GDP B) an increase in the reserve requirement C) an increase in the discount rate D) an increase in the price level E) a sale of government securities by the Fed

Answer 1

20) A) 4 percent

21) C) C to A

22) D) if either the price level rises or the or the quantity of final goods and services produced rises.

23) A) decrease in GDP