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Business, 15.11.2021 01:00 emily0981

We have seen that short-run equilibrium output falls when the Fed raises the real interest rate. Suppose the relationship between short-run equilibrium output and the real interest rate r set by the Fed is given by: Y = 1,000 − 1,000r.

Suppose also that the Fed's reaction function is shown in the table below. Complete the table by computing the short-run equilibrium output for the whole-number inflation rates between 0 and 4 percent.


We have seen that short-run equilibrium output falls when the Fed raises the real interest rate. Su

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