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Explain the Taylor Rule,including the Formula for Setting the Federal

question 48

Essay

Explain the Taylor rule,including the formula for setting the federal funds rate target,and the components of the formula. If the Fed were to use this rule,how many goals would it use to set monetary policy?


Definitions:

Phase Angle

The angular difference in degrees between the peak values of two alternating currents or voltages that have the same frequency but are not in phase.

Stator

The stationary part of an electric machine, such as a motor or generator, that houses the coil windings and does not rotate.

RPM

Stands for revolutions per minute, a unit of rotational speed indicating the number of turns made by an object in one minute.

Torque

The turning force developed by a motor.

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