The Taylor Rule states that short-term interest rates should be manipulated to achieve an acceptable balance between full employment and long-term inflation.

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The Taylor Rule is a widely-used framework for determining an appropriate level for short-term interest rates based on current economic conditions. It suggests that interest rates should be set to achieve an optimal balance between full employment and price stability, typically measured by long-term inflation expectations.

The Taylor Rule States That Short-Term Interest Rates Should Be