In Order for the Fed to Respond Correctly to Changes

question 5

Multiple Choice

In order for the Fed to respond correctly to changes in the inflation rate, the slope of the monetary policy rule line (showing the relationship between the inflation rate and the real interest rate) must be

• A)greater than 1.
• B)less than 1.
• C)greater than zero.
• D)equal to 1.
• E)negative.

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