According to the Taylor rule, Multiple Choice for every 1 percentage point that unemployment exceeds the natural rate of unemployment, there is a 2-percentage-point gap between potential and actual GDP. the rate of money growth should be set at 4 percent per year. if inflation rises by 1 percentage point above its target, then the Fed should raise their targeted interest rate by one-half a percentage point. growth in the money supply should be limited to the long-run average growth rate of real GDP.

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