QUESTION 7 Consider the following Taylor rule i=0.02+0.5y +0.5 (T-2% ) where y is the percentage difference between the actual output and its full-employment level, while is inflation over the last 12 months. The evolution of the economy is described by the following data: Full-emp't output Actual output Price level January, 2050 February, 2050 March, 2050 100.00 100.00 100.00 100.00 101.41 99.52 100.00 102.31 104.71 April, 2050 May, 2050 100.00 101.31 102.58 100.00 100.10 99.64 June, 2050 100.00 101.89 100.07 July, 2050 August, 2050 September, 2050 100.00 100,55 100.71 100.00 100.83 99.20 100.00 99.75 98.40 October, 2050 100.00 99.95 101.82 November, 2050 100.00 98.54 98.83 December, 2050 100.00 97.52 98.68 January, 2051 100.00 97.43 98.10 According to the Taylor rune, in January 2051 the central bank must have set the interest rate at Note: Type in your answer rounded to two decimal places, i.e., your answer must be of the form "999.99". I will not be able to fix correct answers that were entered incorrectly, such as "999.999" or "999,99" or "999". In case the last digit in the correct answer is zero, e.g., "999.90" or "999.00", Blackboard may automatically delete it and you should not do anything about it. In case of percentages, do not type in the percentage symbol "%". If your answer is a negative number, type a dash in front of percent.
QUESTION 7 Consider the following Taylor rule i=0.02+0.5y +0.5 (T-2% ) where y is the percentage difference between the actual output and its full-employment level, while is inflation over the last 12 months. The evolution of the economy is described by the following data: Full-emp't output Actual output Price level January, 2050 February, 2050 March, 2050 100.00 100.00 100.00 100.00 101.41 99.52 100.00 102.31 104.71 April, 2050 May, 2050 100.00 101.31 102.58 100.00 100.10 99.64 June, 2050 100.00 101.89 100.07 July, 2050 August, 2050 September, 2050 100.00 100,55 100.71 100.00 100.83 99.20 100.00 99.75 98.40 October, 2050 100.00 99.95 101.82 November, 2050 100.00 98.54 98.83 December, 2050 100.00 97.52 98.68 January, 2051 100.00 97.43 98.10 According to the Taylor rune, in January 2051 the central bank must have set the interest rate at Note: Type in your answer rounded to two decimal places, i.e., your answer must be of the form "999.99". I will not be able to fix correct answers that were entered incorrectly, such as "999.999" or "999,99" or "999". In case the last digit in the correct answer is zero, e.g., "999.90" or "999.00", Blackboard may automatically delete it and you should not do anything about it. In case of percentages, do not type in the percentage symbol "%". If your answer is a negative number, type a dash in front of percent.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:QUESTION 7
Consider the following Taylor rule
i=0.02+0.5y +0.5 (T-2% )
where y is the percentage difference between the actual output and its full-employment level, while is inflation over the last 12 months. The evolution of the economy
is described by the following data:
Full-emp't output Actual output
Price level
January, 2050
February, 2050
March, 2050
100.00
100.00
100.00
100.00
101.41
99.52
100.00
102.31
104.71
April, 2050
May, 2050
100.00
101.31
102.58
100.00
100.10
99.64
June, 2050
100.00
101.89
100.07
July, 2050
August, 2050
September, 2050
100.00
100,55
100.71
100.00
100.83
99.20
100.00
99.75
98.40
October, 2050
100.00
99.95
101.82
November, 2050
100.00
98.54
98.83
100.00
100.00
December, 2050
97.52
98.68
January, 2051
97.43
98.10
According to the Taylor rune, in January 2051 the central bank must have set the interest rate at
Note: Type in your answer rounded to two decimal places, i.e., your answer must be of the form "999.99". I will not be able to fix correct answers that were entered
incorrectly, such as "999.999" or "999,99" or "999". In case the last digit in the correct answer is zero, e.g., "999.90" or "999.00", Blackboard may automatically delete it
and you should not do anything about it. In case of percentages, do not type in the percentage symbol "%". If your answer is a negative number, type a dash in front of
your answer, i.e, "-999.99".
percent.
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