Use the following Taylor rule to calculate what would happen to the real interest rate if infl

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Use the following Taylor rule to calculate what would happen to the real interest rate if infl ation increased by 3 percentage points.

Target federal funds rate ⫽ 2 ⫹ Current infl ation ⫹ 1 _

2 (Infl ation gap) ⫹ 1 _

2 (Output gap)

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Money Banking And Financial Markets

ISBN: 9780073375908

3rd Edition

Authors: Stephen Cecchetti, Kermit Schoenholtz

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Question Posted: Jul 25, 2024 05:01 AM

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Use the following Taylor rule to calculate what would happen to the real interest rate if infl

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Money Banking And Financial Markets

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