Based on a Taylor rule, which of the following would be appropriate if the economy was experiencing an inflationary gap?

Question

Quizplus · Accepted Answer

The Taylor rule suggests that central banks should raise interest rates when inflation is above the target level or when the economy is growing faster than its potential (an inflationary gap). This helps to cool down the economy and bring inflation back to the target level.

Based on a Taylor Rule, Which of the Following Would