I'm pretty sure it is called withdrawal.
Answer:
correct option is D raise the fed funds rate by 0.5% if inflation rises 1% above its target of 2%
Explanation:
solution
Taylor Rule is invented in 1992 and it is interest rate forecasting model
As the product of John Taylor Rule is the 3 number
- interest rate
- inflation rate
- GDP rate
and Taylor rule is that when GDP is equal to potential GDP and inflation rate is at its target rate of 2%
and the federal funds target rate should be 4%
so we can say here correct option is D raise the fed funds rate by 0.5% if inflation rises 1% above its target of 2%
