Multiple Choice
Suppose the equilibrium real interest rate is 2 percent per year,inflation is 2.5 percent and the output gap is 1 percent. Using the Taylor rule,what is the federal funds rate?
A) 3 percent
B) 3.5 percent
C) 5.25 percent
D) 5.5 percent
Correct Answer:
Verified
Correct Answer:
Verified
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