According to the Taylor Rule, If the Unemployment Rate Is

Multiple Choice

According to the Taylor rule, if the unemployment rate is 3.3 percent and there is no inflation gap, the Fed should

A) raise the Fed's targeted interest rate by 1 percentage point.
B) lower the Fed's targeted interest rate by 1 percentage point.
C) lower the federal funds rate by 3.3 percentage points.
D) do nothing, as the economy will correct itself.