Using Taylor's Rule, When the Equilibrium Real Overnight Rate Is

question 49

Multiple Choice

Using Taylor's rule, when the equilibrium real overnight rate is 2 percent, there is no output gap, the actual inflation rate is zero, and the target inflation rate is 2 percent, the nominal overnight rate should be ________.

• A) 0 percent
• B) 1 percent
• C) 2 percent
• D) 3 percent