Question
Suppose that the equilibrium real federal funds rate is 2.5% and the target inflation rate is 1.5%. If the current inflation is 3.25% and the
Suppose that the equilibrium real federal funds rate is 2.5% and the target inflation rate is 1.5%. If the current inflation is 3.25% and the output gap is 3.6%, use the Taylor rule to find the federal funds rate that the Fed should choose. Express your answers as a percentage. Round your answers to the nearest 1000th percentage point. For example, write 3.789 for 3.789%.
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Management and Cost Accounting
Authors: Alnoor Bhimani, Charles T. Horngren, Srikant M. Datar, Madhav V. Rajan
6th edition
1292063467, 978-1292063461
