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If the Actual Federal Funds Rate Is 1 Percent,when the Target

Question 193

Multiple Choice

If the actual federal funds rate is 1 percent,when the target rate called for by the Taylor rule is 5 percent,this indicates that


A) monetary policy is overly expansionary and a shift toward a more restrictive policy would be appropriate.
B) monetary policy is too restrictive and a shift to a more expansionary policy would be appropriate.
C) monetary policy is unable to influence interest rates.
D) current monetary policy is on target and no policy shift is needed.

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