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Troyanec [42]
3 years ago
15

Suppose that inflation is 2 percent, the federal funds rate is 4 percent, and real GDP is 3 percent below potential GDP. Accordi

ng to the Taylor rule, in what direction and by how much should the Fed change the real federal funds rate?
Business
1 answer:
Alex_Xolod [135]3 years ago
7 0

Answer:

The Fed should decrease the real federal funds rate by 0.5%

Explanation:

The formula according to Taylor can be expressed as;

N=I+R+0.5(I-I*)+0.5(Y-Y*)

where;

N=nominal fed fund rate

I=inflation rate

R=real federal fund rate

I*=target inflation rate

Y-Y*=output gap

In our case;

N=4%=4/100=0.04

I=2%=2/100=0.02

R=unknown=R

I*=assume 2%=2/100=0.02

Y-Y*=-3%=-3/100=-0.03

replacing;

0.04=0.02+R+0.5(0.02-0.02)+0.5(-0.03)

0.04=0.02+R+0-0.015

0.04=R+0.005

R=0.04-0.005=0.035

Change=R-N

Change=0.04-0.035=0.005

The Fed should decrease the real federal funds rate by 0.5%

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A maintenance margin is a minimum equity an investor ought to preserve withinside the margin account after the acquisition has been made. Hence,  the long market value at maintenance in this case is $120,000.

<h3>What do you mean by long market value?</h3>

Long market value at maintenance refers to the point where an account must fall (in market value) to reach minimum maintenance (25% of market value). ;

The maintenance margin is far presently set at 25% of the full value of the securities in a margin account as in step with Financial Industry Regulatory Authority (FINRA) requirements.

To calculate the <em> </em>long market value at maintenance,  divide the debit balance by .75 ($90,000 / .75 = $120,000)

Hence,  the long market value at maintenance is $120,000.

Learn more about long market value at maintenance:

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3 0
2 years ago
The privately-owned school system in Smalltown has a virtually unlimited capacity. It accepts all applicants and operates on bot
oksian1 [2.3K]

Answer:

A

Explanation:

The privately-owned school system in Smalltown generates  positive externality to members of SmalltownA good has positive externality if the benefits to third parties not involved in production is greater than the cost. an example of an activity that generates positive externality is research and development. Due to the high cost of R & D, they are usually under-produced. Government can encourage the production of activities that generate positive externality by granting subsidies.

The free rider problem is a form of market failure. It occurs when people benefit from a good or service of communal nature and do not pay to enjoy these services.

The free rider has caused a decline in revenues and did not cause the private market to undersupply education to the community

6 0
3 years ago
QS 6-4 Perpetual: Inventory costing with FIFO LO P1 A company reports the following beginning inventory and two purchases for th
pogonyaev

Answer:

$544

Explanation:

LIFO means last in first out. It means it's the last purchased inventory that is the first to be sold.

The cost of the 250 units sold would be first deducted from the inventory purchased on the 25th

= 100 × 2.34 = $234

That leaves 250 - 100 = 150 units.

The cost of goods sold would be next allotted to the inventory purchased on the 9th

= 50 × 2.20 = $110

This leaves 150 - 50 = 100

The cost of the 100 would be alloted to the beginning inventory

100 × $2 = $200

Total cost of goods sold = $200 + $110 + $234 = $544

I hope my answer helps you

5 0
3 years ago
"Value added" is defined as: a. the price of the product multiplied by the quantity produced. b. total sales revenue divided by
FromTheMoon [43]

Answer:

d. the value of total product minus raw materials costs.

Explanation:

The price of the product multiplied by the quantity produced is the revenue.

Total sales revenue divided by the quantity produced gives the price of the product.

I hope my answer helps you

6 0
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