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%
The principle that people face tradeoffs applies to individuals, families and societies.
<h3>What does tradeoff mean?</h3>
Tradeoff is an economic term which means that when a person chooses a particular decision, he forgoes other decisions. For example, if a doctor leaves his job to travel the world. He is trading off the income he would earn from working as a doctor to enjoy travelling the world.
Here is the complete question:
The principle that "people face trade-off" applies so:
a) Individuals.
b) Families.
c) Societies.
d) All of the above are correct.
To learn more about tradeoffs please check: brainly.com/question/26315727
Answer:
Explanation:
"I spend more on orange juice even as the price rises".
This implies that orange juice is not an inferior good because people demand less of an inferior product when their prices fall. In this case more is demanded as price rises implying that orange juice is being viewed as a luxury good or healthy drink. Consumers tend to interpret certain price increase positively and view the goods as superior.
Does this mean that I must be violating the law of demand?
YES
Generally, the law of demand states that, "citeris paribus (with all things being equal), as the price of a good rises, quantity demanded falls; conversely, as the price of a good falls, quantity demanded increases".
Therefore if "I spend more on orange juice even as the price rises", then obviously the law of demand is being violated
Answer and Explanation:
The Preparation of the company's revenue and spending variances for December is prepared below:-
The report with respect to the company revenue and spending variance is presented in the attachment below
The revenue refers to the sales of the company
And, the spending variance refers to the difference between the actual amount of expenses incurred and the budgeted amount of expenses incurred. The same is shown in the below attachment.
