Assume that the monetary policy curve is given by r 1 5 0 751 a Calculate the real interest rate when the inflation rate is 2 , 3 , and 4 b Draw a graph of the MP curve, labeling the points from part (a) c Assume now that the monetary policy curve is given by r 2 5 0 751 Does the new monetary policy curve represent an autonomous tightening or loosening of monetary policy d Calculate the real interest rate when the inflation rate is 2 , 3 , and 4 , and draw the new MP curve, showing the shift from part (b)

Question: Assume that the monetary policy curve is given by r = 1.5 + 0.751. a. Calculate the real interest rate when the inflation rate is

Assume that the monetary policy curve is given by r = 1.5 + 0.751π.

a. Calculate the real interest rate when the inflation rate is 2%, 3%, and 4%.

b. Draw a graph of the MP curve, labeling the points from part (a).

c. Assume now that the monetary policy curve is given by r = 2.5 + 0.751π. Does the new monetary policy curve represent an autonomous tightening or loosening of monetary policy?

d. Calculate the real interest rate when the inflation rate is 2%, 3%, and 4%, and draw the new MP curve, showing the shift from part (b).

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