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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Managing in a Global Economy Demystifying International Macroeconomics
Authors: John E. Marthinsen
2nd edition
128505542X, 978-1305176157, 1305176154, 978-1285055428
