The new chairman of the Ionian Central Bank (ICB) is preparing for her first board meeting. She is expected to recommend a monetary policy for the board to pursue. She decides to use the Taylor rule, which was originally developed for the U.S. Federal Reserve. Ionia's potential GDP is 100 million drachma, but current GDP is 98 million. What is Ionia's output gap? Ionia's output gap: -2 Inflation is running at 4%, but the chairman considers an inflation rate of 3% to be a reasonable goal. What is Ionia's inflation gap? %

The new chairman of the Ionian Central Bank (ICB) is preparing for her first board meeting. She is expected to recommend a monetary policy for the board to pursue. She decides to use the Taylor rule, which was originally developed for the U.S. Federal Reserve. Ionia's potential GDP is 100 million drachma, but current GDP is 98 million. What is Ionia's output gap? Ionia's output gap: -2 Inflation is running at 4%, but the chairman considers an inflation rate of 3% to be a reasonable goal. What is Ionia's inflation gap? %

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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