Question: Please help with an explanation 1. In the IS-MP model, we assume that changes in the Fed Funds rate affects real economic activity in the

Please help with an explanation

1. In the IS-MP model, we assume that changes in the Fed Funds rate affects real economic activity in the short run so that the classical dichotomy does not hold. What equation relates the nominal interest rate to the real inter- est rate'? What assumption allows changes in the nominal interest rate to affect the real interest rate? 2. The book (also on slides) lists a number of reasons why ination is sticky. List the reasons and provide an example of each

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