The Taylor rule is an example of
A) an instrument rule focused on the federal funds rate.
B) a targeting rule focused on the monetary base.
C) an instrument rule based on M1.
D) a targeting rule focused on the federal funds rate.
E) an instrument rule focused on the monetary base.

Question

Quizplus · Accepted Answer

The Taylor rule is an instrument rule that provides guidance on setting the federal funds rate based on economic conditions, such as inflation and output gap.

The Taylor Rule Is an Example of