Question

Using​ Taylor's rule, when the equilibrium real federal funds rate is 3​ percent, the positive output gap is 2​ percent, the target inflation rate is 1​ percent, and the actual inflation rate is 2​ percent, the nominal federal funds rate target should be _____

Answer 1

Using​ Taylor's rule, when the equilibrium real federal funds rate is 3​ percent, the positive output gap is 2​ percent, the target inflation rate is 1​ percent, and the actual inflation rate is 2​ percent, the nominal federal funds rate target should be 6.5 %.

`3+2+(2-1)/(2) +(2)/(2) = 6.5`