2b. Based on the trends that may be calculated from the following economic measures, determine which of the countries would be expected to achieve higher economic growth rates over the next year if current trends are sustained? Justify your response. Croatia (millions of kuna) Qtr 1 Qtr 2 Czech Republic (millions of koruna) Qtr 1 Qtr 2 350 386 205 250 110 140 28 Economic Measures Consumer spending Business capital investment Government investment/ fiscal spending Other miscellaneous GDP factors Total GDP 30 -58 -111 -2 52 607 665 3. Answer the following question. A. Based on targets for inflation and overall economic growth rate and on actual observations of inflation and economic growth rates, apply the Taylor rule to estimate what short-term interest rate level should be an appropriate target for monetary authorities. B. Explain why the monetary action suggested by the Taylor rule output may not actually be taken by central bank authorities. GDP Trend/ Inflation Target Economic Measures: Forecast Year-over-year increase in GDP Inflation rate Short-term interest rate (neutral value) 3.2% 2.0% 4.0% 2.6% 4.0% 2b. Based on the trends that may be calculated from the following economic measures, determine which of the countries would be expected to achieve higher economic growth rates over the next year if current trends are sustained? Justify your response. Croatia (millions of kuna) Qtr 1 Qtr 2 Czech Republic (millions of koruna) Qtr 1 Qtr 2 350 386 205 250 110 140 28 Economic Measures Consumer spending Business capital investment Government investment/ fiscal spending Other miscellaneous GDP factors Total GDP 30 -58 -111 -2 52 607 665 3. Answer the following question. A. Based on targets for inflation and overall economic growth rate and on actual observations of inflation and economic growth rates, apply the Taylor rule to estimate what short-term interest rate level should be an appropriate target for monetary authorities. B. Explain why the monetary action suggested by the Taylor rule output may not actually be taken by central bank authorities. GDP Trend/ Inflation Target Economic Measures: Forecast Year-over-year increase in GDP Inflation rate Short-term interest rate (neutral value) 3.2% 2.0% 4.0% 2.6% 4.0%