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In 2021 the economy appears to have fully recovered from the pandemic-induced crisis, that is, estimates ofthe output gap are close to zero or even
In 2021 the economy appears to have fully recovered from the pandemic-induced crisis, that is, estimates ofthe output gap are close to zero or even positive. However, inflation is about 7%, well above the 2% target. On the other hand, the federal funds rate continue to be very close to zero. Some economist argue that the Fed should not react to the current macroeconomic conditions, why do you think these economists are right? (2.5 points) Other economists argue in favor of an increase in the interest rates, what do you think is their argument(s)? (2.5 points) For this assignment you do not need to show me graphs. Just type your answer below
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