1. According to the Taylor Rule, if the output gap falls by 2% and the inflation gap rises by 1%, then the real federal funds rate should be
A. lowered by 1.0%.
B. lowered by 0.5%.
C. left unchanged.
D. raised by 1.0%.
2. Which of the following is most correct?
A large current ratio (relative to competitors) is "good" from the standpoint of liquidity, and would likely increase profitability.
A large current ratio (relative to competitors) is "good" from the standpoint of liquidity, but could damage profitability.
A small current ratio (relative to competitors) is "good" from the standpoint of liquidity, but could damage profitability.