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In the Taylor Rule Formulation for Setting a Federal Funds

Question 35

Multiple Choice

In the Taylor Rule formulation for setting a federal funds target rate, a negative output gap means that the


A) output in the economy is below the economy's potential output.
B) output in the economy is above the economy's potential output.
C) economy is operating at its full employment level.
D) economy is operating above its full employment level.

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