QUESTION 7 Consider the following Taylor rule i=0.02+0.5y+0.5 (n-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 June, 2050 100.00 101.31 102.58 100.00 100.10 99.64 100.00 101.89 100.07 July, 2050 August, 2050 September, 2050 October, 2050 100.00 100.55 100.71 100.00 100.83 99.20 100.00 99.75 98.40 100.00 99.95 101.82 November, 2050 100.00 98.54 98.83 December, 2050 100.00 97.52 98.68 97.43 percent. January, 2051 100.00 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"
QUESTION 7 Consider the following Taylor rule i=0.02+0.5y+0.5 (n-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 June, 2050 100.00 101.31 102.58 100.00 100.10 99.64 100.00 101.89 100.07 July, 2050 August, 2050 September, 2050 October, 2050 100.00 100.55 100.71 100.00 100.83 99.20 100.00 99.75 98.40 100.00 99.95 101.82 November, 2050 100.00 98.54 98.83 December, 2050 100.00 97.52 98.68 97.43 percent. January, 2051 100.00 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"
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
![**QUESTION 7**
Consider the following Taylor rule:
\[ i = 0.02 + 0.5y + 0.5(\pi - 2\%) \]
where \( y \) is the percentage difference between the actual output and its full-employment level, while \( \pi \) 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 | 100.00 | 100.00 | 100.00 |
| February, 2050 | 100.00 | 101.41 | 99.52 |
| March, 2050 | 100.00 | 102.31 | 104.71 |
| April, 2050 | 100.00 | 101.31 | 102.58 |
| May, 2050 | 100.00 | 100.10 | 99.64 |
| June, 2050 | 100.00 | 101.89 | 100.07 |
| July, 2050 | 100.00 | 100.55 | 100.71 |
| August, 2050 | 100.00 | 100.83 | 99.20 |
| September, 2050 | 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 rule, in January 2051 the central bank must have set the interest rate at __________ percent.
**Note:** Type in your answer rounded to two decimal places, i.e., your answer must be of the form “999.99](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1bf02234-c3b4-45f3-9f75-2755794c74b4%2F9c9a3da8-b667-44cf-92d3-029a89a181d0%2Fs8q0ppo_processed.png&w=3840&q=75)
Transcribed Image Text:**QUESTION 7**
Consider the following Taylor rule:
\[ i = 0.02 + 0.5y + 0.5(\pi - 2\%) \]
where \( y \) is the percentage difference between the actual output and its full-employment level, while \( \pi \) 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 | 100.00 | 100.00 | 100.00 |
| February, 2050 | 100.00 | 101.41 | 99.52 |
| March, 2050 | 100.00 | 102.31 | 104.71 |
| April, 2050 | 100.00 | 101.31 | 102.58 |
| May, 2050 | 100.00 | 100.10 | 99.64 |
| June, 2050 | 100.00 | 101.89 | 100.07 |
| July, 2050 | 100.00 | 100.55 | 100.71 |
| August, 2050 | 100.00 | 100.83 | 99.20 |
| September, 2050 | 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 rule, in January 2051 the central bank must have set the interest rate at __________ percent.
**Note:** Type in your answer rounded to two decimal places, i.e., your answer must be of the form “999.99
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education