Is the Taylor rule the specific formula followed by the FOMC? Explain.
What will be an ideal response?
The simple answer is no, the FOMC does not have an explicit formula or target. Professor Taylor developed the rule by tracking, over time, the actual target rates announced by the FOMC and relating these to the real interest rate, the inflation rate and output. By observing these values over time along with the announced target, Professor Taylor was able to develop the rule.
You might also like to view...
If a firm is a profit maximizer and faces positive marginal costs,
A) there is a natural limit to the size of the firm, where MR = 0. B) there is no natural limit to the size of the firm; it can be as large as it wants to be. C) there is a natural limit to the size of the firm, where MR > 0. D) there is no natural limit to the size of the firm, hence the need for government regulation.
Contrary to popular belief, U.S. productivity growth did not actually improve in the mid 1990s despite the massive growth in technological innovation
a. True b. False Indicate whether the statement is true or false
An increase in the price of milk would be shown by a:
A. rightward shift of the supply curve for milk. B. movement up and to the right along the supply curve for milk. C. leftward shift of the supply curve for milk. D. movement down and to the left along the supply curve for milk.
In a perfectly competitive market, if price is greater than average total cost at the level of output where marginal cost equals marginal revenue:
A. the firm must be in long-run equilibrium. B. the firm is earning an economic profit greater than zero. C. the firm is earning an economic profit less than zero. D. We cannot determine whether the firm is earning positive or negative profits.