Suppose that the equilibrium real federal funds rate is 6 percent and the target rate of inflation is 1 percent. Use the following information and the Taylor rule to calculate the federal funds rate target: Current inflation rate = 7 percent Potential real GDP =$14.85 trillion Real GDP = $14.18 trillion The federal funds target rate is ____%. (Enter your response rounded to two decimal places.)
Suppose that the equilibrium real federal funds rate is 6 percent and the target rate of inflation is 1 percent. Use the following information and the Taylor rule to calculate the federal funds rate target: Current inflation rate = 7 percent Potential real GDP =$14.85 trillion Real GDP = $14.18 trillion The federal funds target rate is ____%. (Enter your response rounded to two decimal places.)
Principles of Economics, 7th Edition (MindTap Course List)
7th Edition
ISBN:9781285165875
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter36: Six Debates Over Macroeconomic Policy
Section: Chapter Questions
Problem 4QCMC
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Suppose that the equilibrium real federal funds rate is 6 percent and the target rate of inflation is 1 percent. Use the following information and the Taylor rule
to calculate the federal funds rate target:
Current inflation rate = 7 percent
Potential real GDP =$14.85 trillion
Real GDP = $14.18 trillion
The federal funds target rate is ____%. (Enter your response rounded to two decimal places.)
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