State the Taylor rule. What does the rule predict will happen to the Fed funds rate in
Question:
a. Inflation is 2 percent, the inflation target is 3 percent, and output is 2 percent below potential.
b. Inflation is 4 percent, the inflation target is 2 percent, and output is 3 percent above potential.
c. Inflation is 4 percent, the inflation target is 3 percent, and output is 2 percent below potential.
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The Taylor rule is that the Fed funds target is 2 current inflati...View the full answer
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