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The federal funda rate is 4% and inflation is 3%, the real intrest rate is 5% b. Determine the risk premium for this scenario. Risk

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The federal funda rate is 4% and inflation is 3%, the real intrest rate is 5%

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b. Determine the risk premium for this scenario. Risk Premium = Macmillan Learning c. Move the MP curve to the appropriate position, assuming the risk premium increases by 0.5%. MP curve Real interest rate (%) -1 0 CV LO Output gap (%)

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