Question 411.5 / 1.5 ptsIf actual inflation is lower than expected inflation, then the actual real wage is higher than the expected real wage. This being the case, firms will lay off workers.TrueFalse
Question 421.5 / 1.5 ptsAccording to the Taylor Rule described in the lectures, if the Fed is getting an A+, then the federal funds rate should be set at 5%.
Question 431.5 / 1.5 ptsAccording to the Taylor principle, if actual inflation rises by 1% over target inflation, then the Fed should raise the federal funds rate by 2% to make surethat the real federal funds rate rises which is referred to as "leaning against the wind."
Question 441.5 / 1.5 ptsIf the actual federal funds rate is higher than the funds rates implied by the Taylor rule, then we say that the central bank is hawkish.