According to the Taylor Rule,for a Given Inflation Rate,________

question 55

Multiple Choice

According to the Taylor rule,for a given inflation rate,________.

• A) if bank reserves double, the federal funds rate should double
• B) if nominal output doubles, the federal funds rate should double
• C) every percentage point increase in the inflation rate increases the federal funds rate by 1.5 percentage points
• D) every percentage point increase in the nominal interest rate increases the federal funds rate by 1 percentage point

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