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If the Federal Funds Rate Is Set by the Taylor

Question 109

Multiple Choice

If the federal funds rate is set by the Taylor rule and the inflation rate increases by 3 percentage points,everything else remaining unchanged,the federal funds rate for a given inflation target should ________.


A) increase by 3 percentage points
B) increase by 4.5 percentage points
C) decrease by 3 percentage points
D) decrease by 1.5 percentage points

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