Question: We have seen that shortrun equilibrium output falls when the Fed raises the real interest rate. Suppose the relationship between shortrun equilibrium output and the


We have seen that shortrun equilibrium output falls when the Fed raises the real interest rate. Suppose the relationship between shortrun equilibrium output and the real interest rate rset by the Fed is given by: Y=1.000 -1,000r. Suppose also that the Fed's reaction function is shown in the table below. Complete the table by computing the shortrun equilibrium output for the wholenumber inflation rates between 0 and 4 oercent. Rate of Inflation, n Real Interest, r Output 6.81 8.83 9?8 6.82 6.94 969 6.83 . 958 6.84 b. Graph the aggregate demand curve numerically. Instructions: Graph the resulting aggregate demand curve {5 points total). Your Graph Score: 20% Aggregate Demand \f
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