1. The purpose of a nominal anchor is to anchor 2. On average, the I rate of inflation has the highest reported inflation rate. 3. To maintain its federal funds rate target when the demand for reserves decreases, the Fed must non-borrowed reserves.~ 4. The Taylor principle states that to reduce the Fed needs to increase the nominal interest rate than the increase in inflation. 5. A reason not to raise interest rates to burst a bubble is that raising interest rates may cause a