According to the Taylor Rule, When the Economy Is at Full

Multiple Choice

According to the Taylor rule, when the economy is at full employment and inflation is at its target rate of 2 percent, the Fed should

A) carefully lower the federal funds rate in an attempt to stimulate noninflationary real GDP growth.
B) raise the federal funds rate in an attempt to eliminate the remaining inflation.
C) lower the federal funds rate to lower borrowing costs for the federal government.
D) keep their targeted interest rate at 4 percent.