Based on the Taylor Rule use the following information to calculate the target federal funds rate. Variable Target inflation rate Current inflation rate Real equilibrium federal funds rate Output gap In this case, the Federal funds target rate is: percent. (Round your solution to one decimal place.) Value 2 percent 5 percent 2 percent 1 percent

Based on the Taylor Rule use the following information to calculate the target federal funds rate. Variable Target inflation rate Current inflation rate Real equilibrium federal funds rate Output gap In this case, the Federal funds target rate is: percent. (Round your solution to one decimal place.) Value 2 percent 5 percent 2 percent 1 percent

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The Bank of Zambia has introduced the monetary policy rate {MPC) initially set at 9.0% and which has since moved up to 15.5% as of may 2016. a. What is the purpose of the monetary policy rate and what factors are considered in its determination? b. what are the reasons for the introduction of the policy rate, highlighting both the merits and demerits of this measure and the significance of the policy rate in relation to other monetary policy measures? c. Discuss the implications of the increase in the policy rate from 9.0 to 15.5 % on the financial market and on the Zambian economy in general. What factors may have prompted the increase and what is the likely direction of the movements in the rate going into the second half of 2016? What factors are likely to weigh on the movements?
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