Between Approximately 2001 and 2006, the Taylor Rule Predicted the Federal

Multiple Choice

Between approximately 2001 and 2006, the Taylor rule predicted the federal funds rate was:

A) greater than the actual federal funds rate.
B) less than the actual federal funds rate.
C) statistically equal to the actual federal funds rate.
D) negatively correlated with the federal funds rate.
E) None of these answers is correct; the Taylor rule is used to predict the natural rate of unemployment.