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In the Taylor Rule, If the Output Coefficient ? Is

Question 7

Multiple Choice

In the Taylor rule, if the output coefficient ? is set to zero, then the central bank


A) is mostly concerned with maintaining a low inflation rate
B) will lower interest rates whenever it goes above 2 percent
C) will aggressively increase interest rates as soon as inflation rises
D) engages in real GDP targeting
E) none of the above

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