In a new nation that wants to follow the Friedman Rule, the real interest rate is 5% per year, real GDP grows at 1% per year, and the capital share of GDP is 30%. If the country wants to follow the Friedman rule, what annual inflation rate should the central bank aim for on average?

In a new nation that wants to follow the Friedman Rule, the real interest rate is 5% per year, real GDP grows at 1% per year, and the capital share of GDP is 30%. If the country wants to follow the Friedman rule, what annual inflation rate should the central bank aim for on average?

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter13: Inflation

Section: Chapter Questions

Problem 8SQP

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