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c. Go to the University of Michigan website and collect that data on inflation expectations, current for next year (2022) and next 5 years: http://www.sca.isr.umich.edu/tables.html

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c. Go to the University of Michigan website and collect that data on inflation expectations, current for next year (2022) and next 5 years: http://www.sca.isr.umich.edu/tables.html Assume that the economy is at capacity and that consumers' expectations about inflation for 2022 are accurate. Further, suppose that the natural real interest rate is 0.7 and the coefficient assigned to inflation, =0.5. i. What should the federal funds rate be by the end of 2022 according to the Taylor rule? ( 10 points) ii. The Fed is expected to target an FFR =4.75 in 2023. According to inflation expectations (for the next 5 years) in the survey above and keeping the same assumptions under c)i, would such policy be contractionary or expansionary? Briefly explain. ( 10 points) EXPECTED CHANGE IN INFLATION RATES c. Go to the University of Michigan website and collect that data on inflation expectations, current for next year (2022) and next 5 years: http://www.sca.isr.umich.edu/tables.html Assume that the economy is at capacity and that consumers' expectations about inflation for 2022 are accurate. Further, suppose that the natural real interest rate is 0.7 and the coefficient assigned to inflation, =0.5. i. What should the federal funds rate be by the end of 2022 according to the Taylor rule? ( 10 points) ii. The Fed is expected to target an FFR =4.75 in 2023. According to inflation expectations (for the next 5 years) in the survey above and keeping the same assumptions under c)i, would such policy be contractionary or expansionary? Briefly explain. ( 10 points) EXPECTED CHANGE IN INFLATION RATES

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