The Taylor rule
A. focuses on only fluctuations in real GDP.
B. ignores price level stability to focus on responding to fluctuations in real GDP.
C. is the rule actually followed by the Fed.
D. shows how the Fed could set the federal funds rate.
Answer:D
The Taylor rule
A. focuses on only fluctuations in real GDP. B. ignores price level stability to focus on responding to fluctuations in real GDP. C. is the rule actually followed by the Fed. D. shows how the Fed could set the federal funds rate.