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Kisachek [45]
3 years ago
5

The Taylor rule specifies how policymakers should set the federal funds rate target. Suppose that U.S. real GDP rises 1% above p

otential GDP, all else constant. According to the Taylor rule, the Fed should the federal funds rate target by __________ . Suppose instead that the U.S. inflation rate rises by 1%, all else constant. According to the Taylor rule, the Fed should the federal funds rate target by _____________.
Business
1 answer:
VladimirAG [237]3 years ago
6 0

Answer:

FED raise the federal funds rate target by 0.5%

FED raise the federal fund rate target by 2%

Explanation:

Taylor Rule states that Federal Funds should raise rates when inflation rises. When Gross domestic products growth of a country is high and above potential level then FED should raise rates. When inflation rises by 1% above target level then federal funds should raise FED by 2%.

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No

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Question 15 Multiple Choice Worth 5 points)
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