Suppose that inflation is 2 percent, the federal funds rate is 4 percent, and real GDP is 3 percent below potential GDP. According to the Taylor rule, in what direction and by how much should the Fed change the real federal funds rate?
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Home » Business » Suppose that inflation is 2 percent, the federal funds rate is 4 percent, and real GDP is 3 percent below potential GDP. According to the Taylor rule, in what direction and by how much should the Fed change the real federal funds rate?