According to the Taylor rule, what should the federal funds rate target be if inflation is 5%, the target rate of inflation is 2%, the equilibrium real federal funds rate is 2%,
full-employment real GDP is $9 trillion, and current real GDP is $8.55 trillion?
Fed funds rate target = 5% + 2% + (1/2)(3%) + (1/2)(-5%) = 6%.
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a. True b. False Indicate whether the statement is true or false