According to the Taylor rule, the Fed should:

a. lower the fed funds rate by 2.0% if inflation rises 1.0% above its target of 1.0%.
b. raise the fed funds rate by 2.0% if inflation rises 1.0% above its target of 1.0%.
c. lower the fed funds rate by 0.5% if inflation rises 1.0% above its target of 2.0%.
d. raise the fed funds rate by 0.5% if inflation rises 1.0% above its target of 2.0%.


d

Economics

You might also like to view...

The decision by the federal government to prohibit cigarette companies from advertising on television actually caused the companies' profits to increase, an outcome that is consistent with the prediction of the prisoner's dilemma game

Indicate whether the statement is true or false

Economics

If the economy were left on its own without the interference of government or the Fed, it would move toward an equilibrium rate of growth that would produce, with only minor interruptions, full employment without inflation. What school supports this view?

a. classical b. Keynesian c. monetarism d. supply-side e. neo-Keynesian

Economics

The value of the accumulated assets of an individual is called

a. the Lorenz coefficient b. the Gini coefficient c. income d. wealth e. quintiles

Economics

A price floor policy establishes a minimum price for a market. Which of the following results from a binding price floor?

A. Shortage B. Excess demand C. Excess supply D. Equilibrium

Economics