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If in the Simple Monetary Rule and the Inflation

Question 20

Multiple Choice

If If in the simple monetary rule and the inflation rate is 2 percent below the target inflation rate, the Federal Reserve will: A) lower the target rate by 2 percent. B) raise the interest rate by 1 percent. C) lower the interest rate by 1 percent. D) lower the marginal product of capital by 1 percent. E) Not enough information is given. in the simple monetary rule and the inflation rate is 2 percent below the target inflation rate, the Federal Reserve will:

A) lower the target rate by 2 percent.
B) raise the interest rate by 1 percent.
C) lower the interest rate by 1 percent.
D) lower the marginal product of capital by 1 percent.
E) Not enough information is given.

Correct Answer: