85.A limitation of using the Taylor rule for setting the target federal funds rate would be: A)It makes monetary policy less transparent. B)It makes monetary policymakers less accountable. C)It cannot account for sudden threats to financial stability. D)It is difficult to calculate the target from the formula. Answer: C
Page: 482 A-Head: Guide to Central Bank's Interest Rates: The Taylor Rule.Short Answer Questions86.In 2001, the FOMC lowered the target federal funds rate eleven times, cutting the rate from 6½ percent to 1¾ percent. Why didn't the Fed just cut the rate by larger amounts early on?
LOD: 2 Page: 462 A-Head: The Federal Reserve's Monetary Policy Toolbox.Cecchetti: Money, Banking, and Financial Markets558