If there is a 2 percent unemployment gap and the inﬂation rate is 1 percent, then according to the Taylor rule, the Fed should make their targeted interest rate
A) decrease to 0.5 percent.
B) decrease to 3 percent.
C) decrease to 1.5 percent.
D) decrease to 1 percent.

Question

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The Answer of If there is a 2 percent unemployment gap and the inﬂation rate is 1 percent, then according to the Taylor rule, the Fed should make their targeted interest rate
A) decrease to 0.5 percent.
B) decrease to 3 percent.
C) decrease to 1.5 percent.
D) decrease to 1 percent.

If There Is a 2 Percent Unemployment Gap and the Inﬂation