According to the Taylor rule, if inflation has risen by 6 percentage points above its target of 2 percent, the Fed should:

A.  grow the money supply at a rate of 6 percent per year.
B.  raise the real federal funds rate by 6 percentage points.
C.  raise the real federal funds rate by 3 percentage points.
D.  raise the real federal funds rate by 12 percentage points.

FOORQUIZ ANSWER:

C.  raise the real federal funds rate by 3 percentage points.