Multiple Choice
If the Fed's policy reaction function equals r = .02 + π, where r is the real interest rate and π is the inflation rate. When the inflation rate is at the current target of 2 percent, then the real interest rate will be set at:
A) 2 percent.
B) 6 percent.
C) zero.
D) 4 percent.
Correct Answer:
Verified
Correct Answer:
Verified
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