QUESTION 24 Using the simple monetary rule Rt-r (nt-n), if m 0.5 and the inflation rate is 2 percent below the target inflation rate, the Federal Reserve will OA. raise the marginal product of capital by 1 percent. OB. lower the target rate by 2 percent. OC. lower the interest rate by 1 percent. O D. lower the marginal product of capital by 1 percent. O E. raise the interest rate by 1 percent.

If inflation occurs when the money supply expands, what happens when the money supply contracts? (Think about this one) Prices will adjust to compensate for the altered size of the money supply. The price of everything is dramatically reduced to the point of nearly being 0. O Nothing happens. O Prices also rise.

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The opportunity cost of holding money increases when the Select one: O A. income of consumers increases. B. nominal interest rate rises. C. price of goods and services decrease. O D. purchasing power of money increases. O E. income of consumers decreases.

Only D please

Suppose you read in the Wall Street Journal that the Fed was "increasing its target interest rate." It follows that the rate in question is the and one way in which Fed could achieve its new, higher target rate is by Select one: O a. Federal Funds Rate; conducting an open market sale O b. Federal Funds Rate; conducting an open market purchase O c. Prime Rate; conducting an open market sale d. Prime Rate; conducting an open market purchase

The demand for money increases and the demand for money curve shifts rightward if a. the price level falls. b. the nominal interest rate increases. the real interest rate increases. O C. O d. the inflation rate increases. O e. real GDP increases.

What is the demand for​ money?   When the nominal interest rate​ rises, does the opportunity cost of holding money increase or​ decrease? Does the quantity of money demanded increase or​ decrease? The demand for money is the relationship between the quantity of money demanded and the​ _______ when all other influences on the amount of money that people wish to hold remain the same.     A. price of bonds   B. real interest rate   C. inflation rate   D. nominal interest rate   When the nominal interest rate​ rises, the opportunity cost of holding money​ _______ and the quantity of money demanded​ _______.     A. ​falls; increases   B. ​rises; decreases   C. ​falls; decreases   D. ​rises; increases

4. A common rule used for describing the conduct of monetary policy is the Taylor π = r + 0.5 (²-³) + 0.5(π — ñ), where r is the real rate of rule, given by i interest and it is a target rate of inflation. Assume that the real interest rate at full employment to be constant at 2%. Assume also that the same 2% represents target inflation. a. What is the nominal interest rate i when inflation and output are at their equilibrium target level? b. Suppose that the central bank observes a rate of inflation of 4%. With all other variables at the same level. What is the nominal interest rate the central bank would target according to the Taylor rule?

The Federal Reserve will lose money as a lender of last resort if: Select one: O a. financial institutions fail to pay back their loans. O b. the output gap becomes positive. consumers complain about the use of taxpayer money. O C. O d. the economy improves.