1. Wage contracts are associated with:
a. a price level that is inflexible upward b. a price level that is inflexible downward c. a domestic output that cannot be increased d. domestic output that cannot be decreased?
2. Consider the Taylor rule. If the inflation rate in the economy were to fall by 2% below the target inflation rate, the target federal funds rate would:
A. Decrease by 3.0%
B. Remain at 2.5%
C. Decrease by 1.0%
D. Increase by 1.0%