The fed announces an inflation target

Assignment Help Business Economics

Reference no: EM131391914

Suppose the Fed announces an inflation target of 3.90%. Suppose real GDP is forecasted to grow by 2.93% and that the velocity of money has been stable. What is the largest money growth rate the Fed could implement and still achieve the above mentioned inflation target?

Suppose there is a mid-year revision of GDP forecasts that lowers the expected growth rate. Ceteris paribus, what impact will this have on the rate of inflation?

A) Inflation will be higher.

B) Inflation will be lower.

C) Inflation will be the same.

D) Inflation can be either higher or lower.

Reference no: EM131391914

Questions Cloud

Pressure for the canadian dollar to change in value : Suppose that Canada decides to peg its dollar ($C, or the loonie) to the U.S. dollar at an exchange rate of $C1 = $US1. If the U.S. IS curve shifts to the left, will there be pressure for the Canadian dollar to change in value against the U.S. dollar..

Identifiably different types of customers : Suppose a monopoly sells to two identifiably different types of customers, A and B, who are unable to practice arbitrage. The inverse demand curve for group A is PA = 18 - QA, and the inverse demand curve for group B is PB = 10 - QB. The monopolist i..

Unemployment and economic growth for next fiscal year : The Ministry of Finance and Central Bank for your country are faced with the decision of setting targets for inflation, unemployment and economic growth for the next fiscal year.

Monetary policy affect european interest rates : Suppose the European Central Bank decides to use monetary policy to offset the possible inflationary effects of European expansionary fiscal policy. How would the European Central Bank's monetary policy affect European interest rates?

The fed announces an inflation target : Suppose the Fed announces an inflation target of 3.90%. Suppose real GDP is forecasted to grow by 2.93% and that the velocity of money has been stable. What is the largest money growth rate the Fed could implement and still achieve the above mentione..

Calculate the elasticity of demand : Calculate the elasticity of demand, using the midpoint formula, as price drops from $6 to 5, then from 5 to 4, 4 to 3, 3 to 2, 2 to 1, and, 1 to 0. For each calculation in part c, state: if the price elastic, unitary or inelastic; what portion of the..

Best describes a monopsonist : Which of the following best describes a monopsonist? Which of the following is true of an imperfectly competitive labor market? With regard to monopsonists, which of the following is most accurate?

Discuss eight steps of the two-way communication process : Communication is a transfer of information from one person to another person. Discuss the eight steps of the two-way communication process.

Explain the difference between implicit and explicit costs : Explain the difference between implicit and explicit costs. Give two examples of when an explicit cost is different from an implicit cost. In your own words, explain the difference between accounting and economic profit. Give two examples of when the..

User Account

All Pages