Answered step by step
Verified Expert Solution
Question
1 Approved Answer
please help me to finish it and compare my answer. thank you Homework: Chap... Part 2 of 4 Since monetary policy changes through the fed
please help me to finish it and compare my answer. thank you
Homework: Chap... Part 2 of 4 Since monetary policy changes through the fed funds to occur with a lang policymakers are usually more concerned with adjusting policy according to changes in the forecasted or expected Indiation rate, rather than the current inflation rate. In light of this suppose that monetary policymakers employ the Taylor rule to set the fed funds ruto, where the inflation gap is defined as the difference between expected inflation and the target inflation rate. Assume that the weights on both the inflation and output gaps are the equilibrium real fed funds rate is 2%, the inflation rate target is 3%, and the output gap is 2% the expected inflation rate is 4%, according to the Taylor rule, the fed funds rate should be sot at 75%. (Round your response to one decimal place) Suppose hall of Fed economists forecast inflation to be 3%, and half of Fed economists forecast inflation to be 5% if the Fed uses the average of these two forecasts as its measure of expected inflation, according to the Taylor rule, the fed funds rato should be sot at % (Round your response to one decimal place) Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started