Taylor's rule implies that monetary policy should have been easier than the Fed's actual policy in the
A)1950s
B)1960s
C)1970s
D)1980s

Question

Quizplus · Accepted Answer

Taylor's rule suggests that the nominal interest rate should respond to changes in inflation and economic growth. In the 1980s, inflation was high and the economy was growing slowly, implying that the Fed should have pursued an easier monetary policy by reducing interest rates. Therefore, choice D is the best answer.

Taylor's Rule Implies That Monetary Policy Should Have Been Easier