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Tidy Tidy
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8 years ago
Suppose the equilibrium real federal funds rate is 2 percent, the target rate of inflation is 2 percent, the current inflation rate is 4 percent, and real GDP is 2 percent above potential real GDP. If the weights for the inflation gap and the output gap are both 1/2, then according to the Taylor rule the federal funds target rate equals
A) 4 percent.
B) 6 percent.
C) 8 percent.
D) 10 percent.
Textbook 
Essentials of Economics

Essentials of Economics


Edition: 4th
Authors:
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SydnieSydnie
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8 years ago
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