Question
Suppose that actual inflation is 3 percent, the Fed's inflation target is 2.5 percentage points, and unemployment rate is 2.5 (which is1.5percent below the Fed's
Suppose that actual inflation is 3 percent, the Fed's inflation target is 2.5 percentage points, and unemployment rate is 2.5 (which is1.5percent below the Fed's full-employment target of 4 percent). According to the Taylor Rule, what value will the Fed want to set for its targeted interest rate?
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Macroeconomics
Authors: Glenn Hubbard, Anthony Patrick O'Brien, Matthew P Rafferty
1st Edition
978-0132109994, 0132109999
