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Suppose that the Taylor rule of an economy is i=5+0.5(Y-Y - ), where l is measured in percentage points. A) Describe a graph for the
Suppose that the Taylor rule of an economy is i=5+0.5(Y-Y-), where l is measured in percentage points.
A) Describe a graph for the TR curve in the diagram with Y on the horizontal axis and i on the vertical axis.
B) What is the effect of an increase in I from 5 to 6 on the TR curve?
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