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Suppose that in 1980, the US, inflation rate was 14 percent and the unemployment rate reached 76 percent. Suppose that the target rate of inflation
Suppose that in 1980, the US, inflation rate was 14 percent and the unemployment rate reached 76 percent. Suppose that the target rate of inflation was 3 percent back then and the full employment rate of unemployment was 5.5 percent at that time. What value does the Taylor Rule predict for the Fed's target interest rate? Instructions: Enter your answer rounded to 2 decimal places. percent Refer to the table for Moola below to answer the following questions. Interest Rate Money Supply $ 560 500 500 500 500 Money Demand $ 800 700 600 see 480 Investment at Interest Rate Show) $70 60 SO 4e 3e Potential Real Actual Real GDP at Interest GOP (Rate Shown) $350 $ 390 350 370 350 350 330 350 310 5 6 7 8 350 Instructions: Enter your answers as a whole number a. What is the equilibrium interest rate in Moola? percent b. What is the level of investment at the equilibrium interest rate? c. Is there either a recessionary output gap (negative GDP gap) or an inflationary output gap (positive GDP gap) at the equilibrium interest rate and if either, what is the amount? (Click to select) of s d. Given money demand, by how much would the Moola central bank need to change the money supply to close the output gop? (Click to select the money supply by $ e. What is the expenditure multiplier in Moola
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