Suppose the equilibrium real interest rate is 2 percent per year,inflation is 2.5 percent and the output gap is 1 percent. Using the Taylor rule,what is the federal funds rate?
A) 3 percent
B) 3.5 percent
C) 5.25 percent
D) 5.5 percent
Correct Answer:
Verified
Q158: The Taylor rule
A) focuses on only fluctuations
Q162: "As the Fed Chases Inflation, Critics Shout,
Q163: "As the Fed Chases Inflation, Critics Shout,
Q170: The People's Bank of China announced that
Q178: In November 2008, the Reserve Bank of
Q178: The People's Bank of China announced that
Q179: The Taylor Rule states that the
A) Fed
Q182: Explain how the Fed's response to inflation
Q185: "As the Fed Chases Inflation, Critics Shout,
Q198: In an effort to address the troubled
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents