What does the Taylor rule imply that policymakers should do to the fed funds rate under the
Question:
a. Unemployment rises due to a recession.
b. An oil price shock causes the inflation rate to rise by 1% and output to fall by 1%.
c. The economy experiences prolonged increases in productivity growth while actual output growth is unchanged.
d. Potential output declines while actual output remains unchanged.
e. The Fed revises its (implicit) inflation target downward.
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Related Book For
The Economics of Money Banking and Financial Markets
ISBN: 978-0133836790
11th edition
Authors: Frederic S. Mishkin
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