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According to the Taylor Rule, If the Inflation Rate Is

Question 92

Multiple Choice

According to the Taylor rule, if the inflation rate is one percentage point below the target of 2%, then the Fed should:


A) Raise the real federal funds rate by one percentage point
B) Lower the real federal funds rate by one percentage point
C) Raise the real federal funds rate by half of a percentage point
D) Lower the real federal funds rate by half of a percentage point

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