According to the Taylor Rule, If the Current Inflation Rate

question 11

Multiple Choice

According to the Taylor rule, if the current inflation rate is 3.2%, output is 1% above the full-employment level, and the central bank's announced inflation target is 2%, at what level should the central bank set the nominal interest rate?

• A)2)2%
• B)3)3%
• C)4)4%
• D)5)8%
• E)6)3%

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