According to the Taylor rule, when real GDP is below its natural level, the overnight rate should be _____, and when inflation exceeds 2 percent, the overnight rate should be _____.
A)raised; raised
B)raised; lowered
C)lowered; raised
D)lowered; lowered

Question

Quizplus · Accepted Answer

The Taylor rule suggests lowering the interest rate when real GDP is below its natural level to stimulate economic activity, and raising the interest rate when inflation exceeds 2 percent to control inflation.

According to the Taylor Rule, When Real GDP Is Below