In 2008 and 2009, the Federal Funds Rate Was Well

Multiple Choice

In 2008 and 2009, the federal funds rate was well below the rate suggested by the Taylor rule. A likely explanation for the discrepancy is that ________.

A) the Fed's dual mandate prevents a close reliance on the Taylor rule.
B) policy makers decided that the Taylor rule underestimates the risk of inflation
C) the Taylor rule is not intended to guide policy in response to aggregate supply shocks
D) all of the above
E) none of the above