According to the Taylor rule,which of the following will lead to a higher nominal federal funds rate?
A)a decrease in inflation
B)a negative output gap
C)a positive inflation gap
D)all of the above
E)none of the above

Question

Quizplus · Accepted Answer

The Taylor rule suggests that a higher nominal federal funds rate is warranted when there is a positive inflation gap, meaning inflation is above the target level. This is because the rule prescribes tightening monetary policy (higher interest rates) to cool down inflation.

According to the Taylor Rule,which of the Following Will Lead