The Taylor rule implies that the Fed should set the federal funds target based on which of the following?
A) the proportionate gap between actual real GDP and a measure of potential real GDP
B) the current deviation of the actual inflation rate from the Fed's inflation objective
C) an estimated long-run real interest rate
D) all of the above
D
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Which of the following is a financial intermediary that serves as a bridge between savers and borrowers in the loanable funds market model?
a) Mutual funds b) Corporations c) Government d) Stock market
When policy makers choose between tax policy and spending policy to affect the level of aggregate demand, they tend to choose on the basis of
A. how large a public sector they want. B. how much they want to change aggregate demand. C. how much they want to change aggregate supply. D. which has the larger multiplier.