Suppose the current price level is 149.2 and one year ago the price level was 146.7. Output is currently 12,773.3 and potential output is13,534.2 (both in billions of 2009 dollars).a. What value of the federal funds rate would the Fed choose if it follows the Taylor rule?i = (report your answer in decimals to three places)

The central bank determines the interest rate to control inflation in the economy. However, the long…

Suppose the current price level is 149.2 and one year ago the price level 13,534.2 (both in billions of 2009 dollars). a. What value of the federal funds rate would the Fed choose if it follows i= (report your answer in decimals to three places)

Suppose the current price level is 149.2 and one year ago the price level 13,534.2 (both in billions of 2009 dollars). a. What value of the federal funds rate would the Fed choose if it follows i= (report your answer in decimals to three places)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Suppose the current price level is 149.2 and one year ago the price level was 146.7. Output is currently 12,773.3 and potential output is
13,534.2 (both in billions of 2009 dollars).
a. What value of the federal funds rate would the Fed choose if it follows the Taylor rule?
i = (report your answer in decimals to three places)

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part B