According to the Taylor Rule, the Fed Will Set the Federal

question 353

Multiple Choice

According to the Taylor rule, the Fed will set the federal funds rate target based on which of the following?

• A) an estimated long-run real interest rate
• B) the current deviation of the actual inflation rate from the Fed's inflation objective
• C) the proportionate gap between actual real GDP and a measure of potential real GDP
• D) all of the above

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