Business, 28.07.2021 18:50, reneebrown017

Suppose the equilibrium real federal funds rate is 3 percent, the target rate of inflation is 3 percent, the current inflation rate is 1 percent, and real GDP is 8 percent below potential real GDP. If the weights for the inflation gap and the output gap are both 1/2, then according to the Taylor rule the federal funds target rate equals : A) -3 percent.
B) -1 percent.
C) 3.5 percent.
D) 7 percent

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Suppose the equilibrium real federal funds rate is 3 percent, the target rate of inflation is 3 perc...