According to the taylor rule

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Reference no: EM132063426

1. According to the Taylor Rule, if the output gap falls by 2% and the inflation gap rises by 1%, then the real federal funds rate should be

A. lowered by 1.0%.

B. lowered by 0.5%.

C. left unchanged.

D. raised by 1.0%.

2. Which of the following is most correct?

A large current ratio (relative to competitors) is "good" from the standpoint of liquidity, and would likely increase profitability.

A large current ratio (relative to competitors) is "good" from the standpoint of liquidity, but could damage profitability.

A small current ratio (relative to competitors) is "good" from the standpoint of liquidity, but could damage profitability.

Reference no: EM132063426

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