We have seen that short$-$run equilibrium output falls when the Fed raises the real interest rate. Suppose the relationship between short$-$run equilibrium output and the real interest rate r set by the Fed is given by:

Y $=1,0001,000$r$.$

Suppose also that the Fed's reaction function is shown in the table below. Complete the table by computing the short$-$run equilibrium output for the whole$-$number inflation rates between $0$ and $4$ percent.

Rate of Inflation, $\backslash$pi Real Interest, r Output $($Y$)$

$0\mathrm{.}00($~ $0\%)0\mathrm{.}02($~ $2\%)$

$0\mathrm{.}010\mathrm{.}03$

$0\mathrm{.}020\mathrm{.}04$

$0\mathrm{.}030\mathrm{.}05$

$0\mathrm{.}040\mathrm{.}06$