The Taylor rule helps explain the relationship between the Fed's ________ and ________.
A)money supply target; economic conditions
B)money supply target; the federal funds target
C)federal funds target; the monetary growth rule
D)federal funds target; economic conditions

Question

Quizplus · Accepted Answer

The Taylor rule is a formula that suggests a central bank should adjust interest rates in response to changes in inflation, output, or other economic conditions. Therefore, the Taylor rule helps explain the relationship between the Fed's federal funds target and economic conditions.

The Taylor Rule Helps Explain the Relationship Between the Fed's