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Which of the Following Statements Is False with Regard to Taylor

Question 79

Multiple Choice

Which of the following statements is false with regard to Taylor rule?


A) The central bank sets the interest rate at io, when the real output (Y) is equal to the potential output (YP) .
B) The central bank increases the interest rate, when the real output (Y) is less than the potential output (YP) .
C) The central bank decreases the interest rate, when the real output (Y) is less than the potential output (YP) .
D) The central bank increases monetary base through open market purchases of securities, when the real output (Y) is less than the potential output (YP) .

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