Suppose the actual inflation rate is 3 percent points, the Fed's inflation target is 4 percent points, and unemployment is 1 percent below the Fed's unemployment target (in this case, the information given states the unemployment gap is 1 percent). According to the Taylor rule, what value will the Fed want to set for its target interest rate?

Note: The answer should be typed.

Suppose that the equilibrium real federal funds rate is 1 percent and the target rate of inflation is 3 percent. Use the following information and the Taylor rule to calculate the federal funds rate target: Current inflation rate =3 percent Potential real GDP =$14.24 trillion Real GDP =$14.77 trillion The federal funds target rate is %. (Enter your response rounded to two decimal places.)

Sylvia, a writer for a newspaper, interviewed top managers at 50 large corporations. All of the managers indicated that the primary determinant of planned investment is the interest rate and not their expected sales. In addition they all told her that their desired investment function is very flat.  From this information, if Sylvia is a good macroeconomist, she would conclude that Group of answer choices neither expansionary nor contractionary monetary policy would be very effective. both expansionary and contractionary monetary policy would be very effective. fiscal policy would be very effective, but monetary policy would not be very effective. fiscal policy would not be very effective, but monetary policy would be very effective.

Suppose that inflation is 2 percent, the federal funds rate is 4 percent, and real GDP is 5 percent above potential GDP. According to the Taylor rule, in what direction and by how much should the Fed change the real federal funds rate?   SEE PICTURE!!

Suppose the economy is experiencing inflation. If the Federal Reserve enacts contractionary monetary policy, interest rates will likely   Multiple Choice   rise causing prices to decrease.   fall causing prices to increase.   fall causing prices to decrease.   rise causing prices to increase

The following graph shows the current short-run Phillips curve for a hypothetical economy; the point on the graph shows the initial unemployment rate and inflation rate. Assume that the economy is currently in long-run equilibrium.   Suppose the central bank of the hypothetical economy decides to decrease the money supply. On the following graph, shift the curve or drag the blue point along the curve, or do both, to show the short-run effects of this policy. Hint: You may assume that the central bank's move was unanticipated.   SR Phillips Curve0246810126543210INFLATION RATE (Percent)UNEMPLOYMENT RATE (Percent)SR Phillips Curve      In the short run, an unexpected decrease in the money supply results in    in the inflation rate and    in the unemployment rate.   On the following graph, shift the curve or drag the blue point along the curve, or do both, to show the long-run effects of the decrease in the money supply.   0246810126543210INFLATION RATE…

What Can the Fed Do about Inflation? In the article by Thomas Hogan, we learn that Russia's invasion of the Ukraine nor the shortage or supply chain issues has not derived the main causes of inflation. (Hogan, 2022) The main cause for the issues that we have been facing come directly from the constant price changes and the monetary policy that is currently in place.  We learn that with Federal Open Market Committee (FOMC) has not adjusted their monetary policy, and have been raising the rates in such small increments that is causing the inflation to continue in an upward trend. What needs to occur is the FOMC needs to raise interest rates in greater scales in order the combat the inflation that is taking place and stabilize the price levels that are out there. (Hogan, 2022) What needs occur is that the Fed needs to come up with a policy that will allow for a predetermined path that slows down and regulating the money growth back to a safe place.    Having the guidance from the article…

According to the Taylor Rule, if inflation rises by 2%, then the targeted interest rate should rise by more than 2%.  Select one: True False

According to the Keynesian model, if the Fed wanted to reduce inflationary pressures, which of the following combinations of policies should it pursue?   Group of answer choices   increase the reserve requirement, increase the discount rate, and sell government securities   increase the reserve requirement, increase the discount rate, and buy government securities   increase the reserve requirement, decrease the discount rate, and sell government securities   decrease the reserve requirement, decrease the discount rate, and buy government securities