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liberstina [14]
3 years ago
5

Suppose the initial inflation rate and inflation target are both 2%, that the real federal funds rate is 2%, and that the econom

y is at the full employment level of output. According the Taylor Rule, the federal funds target should be . Suppose now that the inflation rate changes to 6%. The Taylor Rule now prescribes that the federal funds target should be
Business
1 answer:
Nuetrik [128]3 years ago
7 0

Answer:

a. 4%

b. 10%

Explanation:

1. Federal funds target = Real Federal funds rate + Inflation rate + 1/2( inflation gap) + 1/2(output gap)

Inflation gap = Current inflation - inflation target = 2% - 2% = 0

Economy is at full employment so output gap is 0.

= 2% + 2% + 1/2(0) + 1/2 (0)

= 4%

2. Federal funds target = Real Federal funds rate + Inflation rate + 1/2( inflation gap) + 1/2(output gap)

= 2% + 6% + 1/2(6% - 2%) + 1/2(0)

= 10%

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Answer:

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3 0
3 years ago
In 2019, George and Martha are married and file a joint tax return claiming their two children, ages 10 and 8 as dependents. Ass
Tresset [83]

Answer:

The answer is option (b)$4,000

Explanation:

Solution

Given that:

Now

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They are eligible for $2,000 tax credit per child.

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8 0
3 years ago
HELP PLEASE!
ad-work [718]

Answer: C.

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8 0
2 years ago
If Kindle e-readers and Nook e-readers are substitutes, a higher price for Nooks would result in a(n) ______.
lara31 [8.8K]

Answer: a) increase in the demand for Kindles.

Explanation: the substitution effect for substitute goods gives that, if the price of good A rises, the demand for good B rises. Since a substitute good is a good that can be used in place of another, they are goods that a consumer perceives as similar or are comparable, in such a way that having more of one good causes the consumer to desire less of the other good. From the viewpoint of price, and given that consumers always prefer to spend less in instances where two goods are substitutes, it then means that Kindle can be used and preferred in place of Nooks given that the price of Nooks had gone up. Therefore, increasing the price of Nooks causes a corresponding increase in the demand for Kindles.

3 0
3 years ago
You would like to use the fixed-order-interval inventory model to compute the desired order quantity for a company. You know tha
7nadin3 [17]

Answer:

c. 50

Explanation:

Fixed-order-interval inventory model also known as fixed reorder cycle inventory model is used to manage supply of raw material to a business based on demand of the product. Review of inventory is done by inventory analyst at fixed intervals and of inventory level is above a predetermined reorder level, nothing is done.

If however stock is at or below set reorder level raw material is purchased and is based on the formula- Maximum level - Current level.

In the scenario above we use the following formula

Standard deviation of demand over the review and lead-time period(SD)=Square root of { (Lead time+ Number of days between review)* (Standard deviation of daily demand)^2}

SD= √ {(10+15)*(10)^2}

SD= √ (25* 100)

SD= √2,500

SD= 50

8 0
3 years ago
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