Policymakers should do to fed funds rate

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Reference no: EM13741737

What does the Taylor rule imply that policymakers should do to the fed funds rate under the following scenarios?

a. Unemployment declines due to a recovery.

b. A positive supply-side shock causes the rate of inflation to fall by 1% and output to rise by 1%.

c. The economy experiences prolonged reductions in productivity growth while actual output growth is unchanged.

d. Potential output increases while actual output remains unchanged.

e. The Fed revises its (implicit) inflation target up.

Reference no: EM13741737

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