Which of the following is NOT a basis for the Taylor-rule guideline for how the Federal Reserve should set its target value for the federal funds rate?

Question

Quizplus · Accepted Answer

The Taylor-rule guideline does not include the present deviation of the actual unemployment rate from the Fed's unemployment objective as a basis for setting the target value for the federal funds rate. The other options are all included in the Taylor-rule guideline. A long-run real interest rate is used to estimate the neutral level of the federal funds rate that neither stimulates nor slows the economy. The current deviation of the actual inflation rate from the Fed's inflation objective is used to adjust the federal funds rate upward or downward to keep inflation stable. The gap between actual real GDP and potential real GDP is used to adjust the federal funds rate upward or downward to stabilize the economy at full employment.

Which of the Following Is NOT a Basis for the Taylor-Rule