According to the Taylor Rule, If Inflation Has Risen by 6

Multiple Choice

According to the Taylor rule, if inflation has risen by 6 percentage points above its target of 2 percent, the Fed should

A) grow the money supply at a rate of 6 percent per year.
B) raise the real federal funds rate by 6 percentage points.
C) raise the real federal funds rate by 3 percentage points.
D) raise the real federal funds rate by 12 percentage points.