Each of the following statements about the principles underlying the Taylor rule is true except
A) the Fed desires to maintain real output approximately at potential GDP.
B) the Fed desires to maintain unemployment at its natural rate.
C) the Fed desires to maintain inflation at its target level.
D) the Fed desires to maintain interest rates at their target level.
E) all of the above statements are true.

Question

Quizplus · Accepted Answer

The Taylor rule primarily focuses on stabilizing inflation around a target level and output around its potential level. It does not directly aim to maintain interest rates at a target level; instead, it suggests how central banks should adjust nominal interest rates in response to deviations of inflation from its target and output from its potential.

Each of the Following Statements About the Principles Underlying the Taylor