Use the following Taylor rule to calculate what would happen to the real interest rate if inflation
Question:
Use the following Taylor rule to calculate what would happen to the real interest rate if inflation increased by three percentage points.
Target federal funds rate = Natural rate of interest + Current inflation
+ _12 (Inflation gap) + _ 21 (Output gap)
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Related Book For
Money Banking And Financial Markets
ISBN: 9781260226782
6th Edition
Authors: Stephen Cecchetti, Kermit Schoenholtz
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