- CFA Exams
- CFA Exam: Level II 2021
- Study Session 17. Portfolio Management (2)
- Reading 46. Economics and Investment Markets
- Subject 3. The Yield Curve and the Business Cycle
CFA Practice Question
A country's neutral policy rate is 3%. If a central bank expects a positive output gap, it should set its policy rate to ______.
B. = 3%
C. < 3%
A. > 3%
B. = 3%
C. < 3%
Correct Answer: A
When the output gap is positive (negative), the policy rate should be above (below) the neutral rate.
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