Using the Taylor Rule, If the Current Inflation Rate Equals

question 1

Multiple Choice

Using the Taylor rule, if the current inflation rate equals the target inflation rate and real GDP is less than 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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