Explain all option plz......you will not explain all option then I will give you down upvote... You are the Chair of the Federal Reserve Bank of the United States. The neutral rate of interest is 2%, the inflation rate is1%, and the output gap is -0.5%. Using the Fed's rule of thumb, what is the appropriate new nominal federal funds rate thatyou should set for the economy?1%0.5%2%3%

The federal funds rate is the interest rate at which depository institutions (such as banks and…

Answered: You are the Chair of the Federal…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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You are the Chair of the Federal Reserve Bank of the United States. The neutral rate of interest is 2%, the inflation rate is 1%, and the output gap is -0.5%. Using the Fed's rule of thumb, what is the appropriate new nominal federal funds rate that you should set for the economy? 1% 0.5% 2% 3%