If the current inflation is 2.5 %, the inflation gap in the Federal Reserve objective function...
If the current inflation is 2.5 %, the inflation gap in the Federal Reserve objective function will be
a. 0.5%
b. -0.5%
c. 2%
d. 3.5%
e. need more information to decide
-
Homework Answers
The federal reserve bank generally recommends inflation rate to be 2%.
If it is lower than it then economy has to suffer from the deflation when inflation rate Is very high
The federal open market committee (FOMC) tries to maintain it over the medium term
So here the gap is 2-2.5= -0.5%
Therefore option B.
Add Answer to:
If the current inflation is 2.5 %, the inflation gap in the
Federal Reserve objective function...
Assume that the equilibrium real federal funds rate is 2% and the target for inflation is...
Assume that the equilibrium real federal funds rate is 2% and the target for inflation is 1.0%. Suppose that the inflation rate is at 3.5%, leading to an inflation gap of 2.5% (equal to 3.5% -1.0%), and real GDP is 1.0% above its potential, resulting in a positive output gap of 1.0%. The Taylor rule suggests that the federal funds rate should be set at: A. 5.25%. B. 7.25%. C. 6.00%. D. 3.25%
6. The Taylor rule Aa Aa Economist John B. Taylor found empirically that the Federal Reserve (the...
6. The Taylor rule Aa Aa Economist John B. Taylor found empirically that the Federal Reserve (the Fed) tended to follow a general rule for federal funds rate targeting: Federal Funds Target Rate (FFTarget) = 296 + Inflation Rate + [0.5 x (Inflation Gap)] + [0.5 x (Output Gap) Use this relationship to fil in the following table with the target federal funds rate the Fed will set, given the inflation rate, target inflation rate, and output gap percentage. Target...
For questions 1-3 assume that the initial federal funds rate is 2.5%, the discount rate is...
For questions 1-3 assume that the initial federal funds rate is 2.5%, the discount rate is 3.5% and the required reserve rate is 10%. 1) Suppose that the Federal Reserve makes an open market sale. How (if at all) will this affect the money supply? a. The money supply will increase b. The money supply will decrease The money supply will not be greatly affected C. 2) Suppose that the Federal Reserve decreases the required reserve rate to 6%. How...
UESTION 38 When the Federal Reserve began its policy of quantitative easing in November 2008, the...
when the federal reserve began its policy of quan
UESTION 38 When the Federal Reserve began its policy of quantitative easing in November 2008, there wasin the monetary base. ︵ a a decline Ob. a dramatic increase c. no change O d. a slight increase QUESTION 42 monetary policy. In the current year, a shock has lowered the inflation rate from 1.5% The central bank of Substantia uses a price level target to conduct to 1.0%. Following the shock, firms...
Select one o a. if the weight the Reserve Bank places on the output gap increases...
Select one o a. if the weight the Reserve Bank places on the output gap increases X O b. if the weight the Reserve Bank places on inflation decreases c. if the weight the Reserve Bank places on inflation increases d. if the weight the Reserve Bank places on the output gap decreases
In the long run, the economic variable(s) that the Federal Reserve can affect is (are) A)...
In the long run, the economic variable(s) that the Federal Reserve can affect is (are) A) inflation. B) output. C) unemployment. D) A & B only. E) A, B, & C. In the short-run, the economic variable(s) that the Federal Reserve has significant effect on is (are) A) inflation. B) output. C) unemployment. D) A & B only. E) A, B, & C. Provide explanation please
When would the Federal Reserve engage in contractionary monetary policy? a. never b. when inflation is...
When would the Federal Reserve engage in contractionary monetary policy? a. never b. when inflation is high c. when unemployment is high d. when gdp is low
D. 11.11% 14. Based on Table 2, if the Federal Reserve conducts an open market sale. Predict how GDP and inflation...
D. 11.11% 14. Based on Table 2, if the Federal Reserve conducts an open market sale. Predict how GDP and inflation will change? Table 2 Inflation GDP 3% 5% A.GDP=4.00%, Inflation 2.00% B. GDP-6.00%, Inflation 4.00% C. GDP-6.00%, Inflation 2.00% D. GDP-4.00%, Inflation 4.00%
The Federal Reserve issues a report indicating that future inflation will increase from 3% to 4%....
The Federal Reserve issues a report indicating that future inflation will increase from 3% to 4%. As a result... A) the demand for loanable funds shifts right. B) the supply curve for bonds shifts left. C) the equilibrium interest rate falls. D) the equilibrium price of bonds rises.
Circle the best answer 1. The purchase of Treasury securities by the Federal Reserve will, in...
Circle the best answer 1. The purchase of Treasury securities by the Federal Reserve will, in general, A) not change the money supply. B) not change the quantity of reserves held by banks. C) decrease the quantity of reserves held by banks. D) increase the quantity of reserves held by banks. Suppose, r0.10,0 $400 Billion, D-5800 Billion, EX.R- $0.8 billion MI-CD-$1200 Billion 2. Refere to above information, the mm (mony multiplier) is A) 1.5 B) 2.5 C) 2 D) 4...
6. The Taylor rule Aa Aa Economist John B. Taylor found empirically that the Federal Reserve (the Fed) tended to follow a general rule for federal funds rate targeting: Federal Funds Target Rate (FFTarget) = 296 + Inflation Rate + [0.5 x (Inflation Gap)] + [0.5 x (Output Gap) Use this relationship to fil in the following table with the target federal funds rate the Fed will set, given the inflation rate, target inflation rate, and output gap percentage. Target...
For questions 1-3 assume that the initial federal funds rate is 2.5%, the discount rate is 3.5% and the required reserve rate is 10%. 1) Suppose that the Federal Reserve makes an open market sale. How (if at all) will this affect the money supply? a. The money supply will increase b. The money supply will decrease The money supply will not be greatly affected C. 2) Suppose that the Federal Reserve decreases the required reserve rate to 6%. How...
when the federal reserve began its policy of quan
UESTION 38 When the Federal Reserve began its policy of quantitative easing in November 2008, there wasin the monetary base. ︵ a a decline Ob. a dramatic increase c. no change O d. a slight increase QUESTION 42 monetary policy. In the current year, a shock has lowered the inflation rate from 1.5% The central bank of Substantia uses a price level target to conduct to 1.0%. Following the shock, firms...
Select one o a. if the weight the Reserve Bank places on the output gap increases X O b. if the weight the Reserve Bank places on inflation decreases c. if the weight the Reserve Bank places on inflation increases d. if the weight the Reserve Bank places on the output gap decreases
D. 11.11% 14. Based on Table 2, if the Federal Reserve conducts an open market sale. Predict how GDP and inflation will change? Table 2 Inflation GDP 3% 5% A.GDP=4.00%, Inflation 2.00% B. GDP-6.00%, Inflation 4.00% C. GDP-6.00%, Inflation 2.00% D. GDP-4.00%, Inflation 4.00%
Circle the best answer 1. The purchase of Treasury securities by the Federal Reserve will, in general, A) not change the money supply. B) not change the quantity of reserves held by banks. C) decrease the quantity of reserves held by banks. D) increase the quantity of reserves held by banks. Suppose, r0.10,0 $400 Billion, D-5800 Billion, EX.R- $0.8 billion MI-CD-$1200 Billion 2. Refere to above information, the mm (mony multiplier) is A) 1.5 B) 2.5 C) 2 D) 4...
Most questions answered within 3 hours.
-
Where is the error in this code sequence?
String s1 = "Hello";
String s2 = "ello";...
asked 10 months ago -
Financial data for Joel de Paris, Inc., for last year
follow:
Joel de Paris, Inc.
Balance...
asked 10 months ago -
Consider this reaction:
Al2(SO4)3 (aq)+ BaCl3
(aq) Al2Cl6 (aq)- +
3BaSO4(s) . What is the...
asked 10 months ago -
Suppose that Savneet is considering increasing her
recent random sample from 20 car rentals to 40...
asked 10 months ago -
Trucks arrive at an unloading terminal at an average rate of 120
per hour.
Trucks arrive...
asked 10 months ago -
Why are methanol and ethanol completely soluble in water while
octanol is not very little soluble....
asked 10 months ago -
A facilities manager at a university reads in a research report
that the mean amount of...
asked 10 months ago -
When the CuSO4 is rehydrated by adding water to the anhydrous
compound, is this an endothermic...
asked 10 months ago -
A ray of sunlight is passing from diamond into crown glass; the
angle of incidence is...
asked 10 months ago -
A block of mass 0.249 kg is placed on top of a light, vertical
spring of...
asked 10 months ago -
how do the kidneys compensate in the presences of acidosis
a) trigger hyperventilate
b) reserve acid...
asked 10 months ago -
Question 501 pts
The rental rate of capital to the firm increases. Which of the
following...
asked 10 months ago