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 0.5% if RGDP increases 1.0% over potential GDP.
B) ​raise the fed funds rate by 0.5% if RGDP increases 1.0% over potential GDP.
C) ​raise the fed funds rate by 1.0% if RGDP increases 0.5% over potential GDP.
D) ​raise the fed funds rate by 2.0% if RGDP increases 0.5% over potential GDP.