If the Federal Reserve Tries to Target Inflation near 2

question 104

Multiple Choice

If the Federal Reserve tries to target inflation near 2%, the inflation rate is 2.1%, and output is 4% below potential GDP, the target federal funds rate according to the Taylor rule is

• A) 0.05%.
• B) 2.1%.
• C) 2.15%.
• D) 4.15%.

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