According to the Taylor rule, if the target rate of inflation for the Fed is 2 percent and inflation rises to 3 percent at full unemployment, then the Fed should

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03-12-2021
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According to the Taylor rule, if the target rate of inflation for the Fed is 2 percent and inflation rises to 3 percent at full unemployment, then the Fed should

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jayilych4real jayilych4real · Answer 1 · 2021-12-15T08:52:20+01:00

The thing which would happen based on the Taylor's rule if the target rate of inflation for the Fed is 2 percent and inflation rises to 3 percent at full unemployment is to:

Raise its target fed funds rate

According to the given question, we are asked to state what would happen based on the Taylor's rule if the target rate of inflation for the Fed is 2 percent and inflation rises to 3 percent at full unemployment.

As a result of this, we can see that based on Taylor's rule, if the target rate of inflation for the Fed is 2 percent and inflation rises to 3 percent at full unemployment, then the Fed should increase its target fed funds rate whenever this happens.