Suppose the Inflation Rate Is 2

question 85

Multiple Choice

Suppose the inflation rate is 2.5 percent, and the output gap is 1 percent.Using the Taylor rule, the Bank of Canada sets the overnight loans rate equal to

• A)3.5 percent.
• B)5.5 percent.
• C)5.25 percent.
• D)5.75 percent.
• E)3 percent.

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