Problem 2: The Taylor rule John Taylor of Stanford University proposed the following monetary policy rule Re - r = m(Tt - 1 ) + nyt That is, Taylor rule suggests that monetary policy should increase the real interest rate whenever output exceeds potential. Combine this MP rule with the IS curve derived in problem 1 to get a new aggregate demand curve. How does it differ from the aggregate demand curve in 1 d). How does it differ from the one in the textbook Ch 13