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udents D Question 28 The simple monetary policy rule R, - F = m (x - #) implies that if: 7, = #, the interest rate is zero. $, ,| the Federal Reserve should lower the interest rate. 1, = 1, the Federal Reserve should raise the interest rate.nts D Question 26 When there is deflation: it has no effect on the unemployment rate. it has no effect on the output gap. nominal interest rates are negative. the central bank cannot push the real interest rate to zero. there is a decline in real money.Idents 3 pts D Question 30 The federal budget deficit in 2009 from percent of GDP in 2008. O rose 0 percent; -12 fell to 92 percent of GDP; 120 fell to -10 percent of GDP; 0.2 rose to 120 percent of GDP; -20 rose to 10 percent of GDP; 3 PreviousD Question 27 If the current rate of inflation is 2 percent, using the values suggested by Professor Taylor, T = 2%, T = 2%, m = 7, , the the monetary policy rule predicts a nominal interest rate of percent. 4 1 O 3.5 O 0.5 4.5D Question 29 U.S. government spending on goods and services: O does not include transfer payments. can act as a policy instrument designed to mitigate short-run fluctuations. can act as a temporary shock that causes short-run fluctuations. O represents about 20 percent of the U.S. GDP. O All of these answers are correct. Previous Next >