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1. Suppose you are given the following information about country X: equilibrium interbank interest rate (fed funds rate) = 5%, actual inflation rate = 12%,

1. Suppose you are given the following information about country X: equilibrium interbank interest rate (fed funds rate) = 5%, actual inflation rate = 12%, inflation rate target = 6%, potential GDP = $235 billion, actual GDP $230 billion. Use Taylor rule to calculate the interbank interest rate target for country X.

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