The Taylor rule expresses the federal funds rate as the weighted average of:
A)the unemployment rate and inflation.
B)inflation and short-run output.
C)the misery index,money growth rate,and the mortgage rate.
D)the CPI and real GDP.
E)long-run output and the natural rate of unemployment.

Question

Quizplus · Accepted Answer

The Taylor rule expresses the federal funds rate as the weighted average of inflation and short-run output. It is used to guide monetary policy by central banks in order to achieve their inflation targets. The rule was proposed by John Taylor, an economist at Stanford University, and has been widely adopted by central banks around the world as a useful tool for setting interest rates.

The Taylor Rule Expresses the Federal Funds Rate as the Weighted