For the economy described below: C = 2,800+ 0.5(YT) - 8,000r IP = 2,000 - 8,000r G = 2,500 NX = 0 T = 3,600 a. Suppose that potential output Y' equals 9.080. What real interest rate should the Fed set to bring the economy to full employment? You may take as a given that the multiplier for this economy is 2. Instructions: Enter all your responses as whole numbers. Real rate of interest I b. Suppose that potential output Y* equals 7,800. What real interest rate should the Fed set to bring the economy to full employment? You may take as given that the multiplier for this economy is 2. Real rate of interest: %

For the economy described below: C = 2,800+ 0.5(YT) - 8,000r IP = 2,000 - 8,000r G = 2,500 NX = 0 T = 3,600 a. Suppose that potential output Y' equals 9.080. What real interest rate should the Fed set to bring the economy to full employment? You may take as a given that the multiplier for this economy is 2. Instructions: Enter all your responses as whole numbers. Real rate of interest I b. Suppose that potential output Y* equals 7,800. What real interest rate should the Fed set to bring the economy to full employment? You may take as given that the multiplier for this economy is 2. Real rate of interest: %

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter12: Money And Banking

Section: Chapter Questions

Problem 13E

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