Assume that the actual inflation rate is 3 percent, the target inflation rate is 2.5 percent, and that the percentage difference between actual and potential real GDP is 1 percent
According to the Taylor rule, the federal funds rate target should be A) 3.25 percent.
B) 5.75 percent.
C) 6.25 percent.
D) 5.50 percent.
C
Economics
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