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Assume the Central Bank Announced a 2% Inflation Target and Has

Question 37

Multiple Choice

Assume the central bank announced a 2% inflation target and has set the nominal interest rate at 5.0%.If actual inflation is 2.8%, by how much is output off the full-employment level?


A) -1.2%
B) -0.8%
C) -0.4%
D) +0.4%
E) +1.2%

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