An increase in real interest rates will ________ current ...

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An increase in real interest rates will ________ current consumption for households who are lenders and will ________ current consumption for households who are borrowers.
 
  A) increase; decrease
  B) decrease; increase
  C) have an unclear effect on; decrease
  D) decrease; have an unclear effect on

Question 2

If the inflation rate target is 2, the current inflation rate is 1, and the output gap is minus 2, then according to the Taylor rule, the nominal federal funds rate should be ________ percent.
 
  A) zero
  B) two
  C) four
  D) three
  E) none of the above

[heinisk01]

Answer to Question 1

C

Answer to Question 2

B

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TYSM

[AmberC1996]

Excellent