According to the Taylor rule, which of the following will lead to ...

[michelleunicorn]

According to the Taylor rule, which of the following will lead to the largest increase in the nominal federal funds rate?
 
  A) a two percentage point increase in the target inflation rate
  B) a one percentage point decrease in the target inflation rate
  C) a one percentage point increase in output
  D) a two percentage point decrease in output
  E) a one percentage point increase in the inflation rate

Question 2

Among the countries that use the euro, the real exchange rate ________ and the nominal exchange rate ________.
 
  A) is fixed; is fixed
  B) is fixed; can change
  C) can change; is fixed
  D) can change; can change

[carolinefletcherr]

Answer to Question 1

E

Answer to Question 2

C