If the Federal Reserve sets the federal funds rate equal to 2 plus the inflation rate plus one-half of the inflation gap plus one-half of the output gap, it is following

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Quizplus · Accepted Answer

This is the Taylor Rule, named after economist John Taylor who proposed it in 1993. It is a guideline for central banks to set their short-term interest rates based on inflation and economic output.

If the Federal Reserve Sets the Federal Funds Rate Equal