Suppose the equilibrium real federal funds rate is 3 percent, the target rate of inflation is 3 percent, the current inflation rate is 1 percent, and real GDP is 8 percent below potential real GDP. If the weights for the inflation gap and the output gap are both 1/2, then according to the Taylor rule the federal funds target rate equals : A) -3 percent.
B) -1 percent.
C) 3.5 percent.
D) 7 percent

B) -1 percent.

Explanation:

The computation of the federal fund target rate should be given below;

= Real federal fund rate + current inflation rate + (-current inflation rate - real GDP) + 0.5 real GDP

= 3 + 1 + (-1 - 8) + 0.5 × 8

= 4 - 9 + 4

= -1 percent

Hence, the second option is correct

the correct answer is - no.

winnipeg, canada, is not further away from the equator than moscow, russia, in fact moscow is the city that is further away from the equator. moscow is on a latitude of 55.7558° north, while winnipeg is on a latitude of 49.8951° north, thus putting moscow by 5.8607° further away from the equator than winnipeg is.

answer; normative economics;