Is the Taylor rule the specific formula followed by the FOMC? Explain.
What will be an ideal response?
The simple answer is no, the FOMC does not have an explicit formula or target. Professor Taylor developed the rule by tracking, over time, the actual target rates announced by the FOMC and relating these to the real interest rate, the inflation rate and output. By observing these values over time along with the announced target, Professor Taylor was able to develop the rule.
You might also like to view...
Which of the following observations concerning money market mutual funds is not true? a. They are interest-earning accounts provided by brokers
b. They are considered to be near money. c. Depositors are allowed to write checks against their accounts. d. These funds are invested in long-term securities.
According to Keynesian economists, monetary policy is __________ effective at changing the price level and Real GDP
A) always B) sometimes C) never D) There is no Keynesian position with respect to monetary policy.