According to the Taylor rule, if the inflation rate is one percentage point below the target of 2%, then the Fed should:
A. Raise the real federal funds rate by one percentage point
B. Lower the real federal funds rate by one percentage point
C. Raise the real federal funds rate by half of a percentage point
D. Lower the real federal funds rate by half of a percentage point
D. Lower the real federal funds rate by half of a percentage point
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In the U.S. economy, which of the following is NOT a generally accepted economic function of government?
A) providing public goods B) distributing consumer goods C) ensuring economy-wide stability D) promoting competition in the marketplace
The price rationing mechanism of a freely functioning market leads to the most efficient use of resources because
A) all gains from mutually beneficial trade are captured. B) the Federal Trade Commission regulates the market. C) of the rise of the legislative apparatus that supports trade. D) the Justice Department monitors market activities.