Using the Taylor Rule, If the Current Inflation Rate Exceeds

question 210

Multiple Choice

Using the Taylor rule, if the current inflation rate exceeds the target inflation rate and real GDP exceeds potential GDP, then the overnight interest target rate ________ the sum of the current inflation rate plus the equilibrium real overnight interest rate.

• A)will be greater than
• B)will be less than
• C)will be the same as
• D)may be greater than or less than

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