Assume the Central Bank Announced a 2% Inflation Target and Has

question 37

Multiple Choice

Assume the central bank announced a 2% inflation target and has set the nominal interest rate at 5.0%.If actual inflation is 2.8%, by how much is output off the full-employment level?

• A)-1.2%
• B)-0.8%
• C)-0.4%
• D)+0.4%
• E)+1.2%

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