According to the Taylor Rule, the Fed Should

Multiple Choice

According to the Taylor rule, the Fed should:

A) ​lower the fed funds rate by 2.0% if inflation rises 1.0% above its target of 1.0%.
B) ​raise the fed funds rate by 2.0% if inflation rises 1.0% above its target of 1.0%.
C) ​lower the fed funds rate by 0.5% if inflation rises 1.0% above its target of 2.0%.
D) ​raise the fed funds rate by 0.5% if inflation rises 1.0% above its target of 2.0%.