Suppose an economy faces the following situation: current federal funds rate = 4%; inflation rate = 3%; inflation rate target = 2%; and current GDP 3% lower than full-employment GDP. According to the Taylor rule, which policy approach should this country be using?

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The Answer of Suppose an economy faces the following situation: current federal funds rate = 4%; inflation rate = 3%; inflation rate target = 2%; and current GDP 3% lower than full-employment GDP. According to the Taylor rule, which policy approach should this country be using?

Suppose an Economy Faces the Following Situation: Current Federal Funds