Multiple Choice
Suppose the inflation rate target is zero and the long-run federal funds target is also zero.If the federal funds rate set using the Taylor rule is 1.5 percent and inflation rate is 3 percent,the output gap is ________.
A) −6 percent
B) 1.5 percent
C) 4.5 percent
D) 6 percent
Correct Answer:
Verified
Correct Answer:
Verified
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