Using the Taylor Rule, If the Current Inflation Rate Equals

question 163

Multiple Choice

Using the Taylor rule, if the current inflation rate equals the target inflation rate and real GDP is greater than potential GDP, then the overnight lending target rate ________ the sum of the current inflation rate plus the real equilibrium 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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