Question

According to the Taylor​ rule, the Fed should raise the federal funds interest rate when inflation​ ________ the​ Fed's inflation target or when real GDP​ ________ the​ Fed's output target.

Answer 1

The Federal Reserve seeks to control inflation by influencing interest rates. When inflation is too high, the Federal Reserve typically raises interest rates to slow the economy and bring inflation down.

Step-by-step explanation:

Answer 2

rises above; rises above

Step-by-step explanation:

According to the Taylor​ rule, the Fed should raise the federal funds interest rate when inflation​ rises above the​ Fed's inflation target or when real GDP​ rises above the​ Fed's output target.