Question: Use the information from the previous problem. But now suppose the Fed unexpectedly increases the growth rate of the money supply, causing the inflation rate

 Use the information from the previous problem. But now suppose the

Use the information from the previous problem. But now suppose the Fed unexpectedly increases the growth rate of the money supply, causing the inflation rate to rise unexpectedly from 2% to 5% per year. The expected real interest rate and the actual real interest rate after the increase in the money supply are: 4% and 10% respectively 8% and 5% respectively 10% and 7% respectively 4% and 7% respectively Use the information from the previous problem. But now suppose the Fed unexpectedly increases the growth rate of the money supply, causing the inflation rate to rise unexpectedly from 2% to 5% per year. The expected real interest rate and the actual real interest rate after the increase in the money supply are: 4% and 10% respectively 8% and 5% respectively 10% and 7% respectively 4% and 7% respectively

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