Which of the Following Correctly Represents the Taylor Rule

question 91

Multiple Choice

Which of the following correctly represents the Taylor rule?

• A) i = Π + i* + a(Π - Π*) / b (GDP - GDP*), where Π is the inflation rate, Π* is the target inflation rate, GDP* is the potential GDP, and i* is the real interest rate.
• B) i = Π + i* + a(Π - Π*) + b (GDP - GDP*), where Π is the inflation rate, Π* is the target inflation
• C) i = Π + i* + a(Π - Π*) - b (GDP - GDP*), where Π is the inflation rate, Π* is the target inflation rate, GDP* is the potential GDP, and i* is the real interest rate.
• D) i = Π + i* + a(Π - Π*) * b (GDP - GDP*), where Π is the inflation rate, Π* is the target inflation

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