Refer to Figure 2-9. What is the opportunity cost of producing 1 ...

[Lisaclaire]

Refer to Figure 2-9. What is the opportunity cost of producing 1 popsicle in Iceland?
 
  A) 1 1/2 snow cones B) 3/4 of a snow cone C) 2/3 of a snow cone D) 270 snow cones

Question 2

Suppose the equilibrium real federal funds rate is 5 percent, the target rate of inflation is 3 percent, the current inflation rate is 5 percent, and real GDP is 4 percent above 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) 1 percent. B) 9 percent. C) 13 percent. D) 17 percent.

[cegalasso]

Answer to Question 1

A

Answer to Question 2

C

[Lisaclaire]

Excellent

[apple]

Thanks for the timely response, appreciate it