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According to the Taylor Rule,the Fed Should

Question 45

Multiple Choice

According to the Taylor rule,the Fed should:


A) lower the fed funds rate by 0.5% if GDP increases 1.0% over potential GDP.
B) raise the fed funds rate by 0.5% if GDP increases 1.0% over potential GDP.
C) raise the fed funds rate by 1.0% if GDP increases 0.5% over potential GDP.

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