What is the Taylor rule and how does it work? What will be an ...

[JMatthes]

What is the Taylor rule and how does it work?
 
  What will be an ideal response?

Question 2

Honda will sell its vehicles to anyone who wants to and can buy one. Honda is using a ________ allocation method.
 
  A) first-come, first-served
  B) market price
  C) contest
  D) majority rule
  E) command

[lou]

Answer to Question 1

The Taylor rule is an instrument rule. The Taylor rule is a proposed formula for setting the federal funds rate. Taylor proposes that if his formula is followed inflation will stay close to 2 percent a year and real GDP will remain closer to potential GDP, thereby improving macroeconomic performance. The formula is based on the core inflation rate and the output ga

Answer to Question 2

B