According to the Taylor Principle, The Fed should increase interest rates by 1.5 times the increased rate of inflation The Fed should decrease interest rates by 0.5 times the GDP gap The Fed should increase interest rates by 2 times the GDP gap deficit The Fed should decrease interest rates by 1.5* the increased rate of inflation
According to the Taylor Principle, The Fed should increase interest rates by 1.5 times the increased rate of inflation The Fed should decrease interest rates by 0.5 times the GDP gap The Fed should increase interest rates by 2 times the GDP gap deficit The Fed should decrease interest rates by 1.5* the increased rate of inflation
Chapter16: Monetary Policy
Section: Chapter Questions
Problem 8SQ
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Question
According to the Taylor Principle,
|
The Fed should increase interest rates by 1.5 times the increased rate of inflation |
|
The Fed should decrease interest rates by 0.5 times the GDP gap |
|
The Fed should increase interest rates by 2 times the GDP gap deficit |
|
The Fed should decrease interest rates by 1.5* the increased rate of inflation |
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