According to the Taylor Rule, If Inflation Has Risen by 6

question 105

Multiple Choice

According to the Taylor rule, if inflation has risen by 6 percentage points above its target of 2 percent, the Fed should

• A)grow the money supply at a rate of 6 percent per year.
• B)raise the real federal funds rate by 6 percentage points.
• C)raise the real federal funds rate by 3 percentage points.
• D)raise the real federal funds rate by 12 percentage points.

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