According to the Taylor rule,the Fed should raise the federal funds interest rate when inflation ________ the Fed's inflation target or when real GDP ________ the Fed's output target.
A)rises above;drops below
B)drops below;drops below
C)rises above;rises above
D)drops below;rises above

Question

Quizplus · Accepted Answer

The Taylor rule suggests that the Fed should raise interest rates when inflation rises above the target or when real GDP rises above the output target, to prevent the economy from overheating.

According to the Taylor Rule,the Fed Should Raise the Federal