Suppose that the Fed's inflation target is 2%, potential output growth is 3.5&, and velocity is a function of how...
chi.smSuppose that the Fed's inflation target is 2%, potential output growth is 3.5&, and velocity is a function of how much the interest rate differs from 5%:
%triangleV= 0.5*(i-5)
Suppose tht a model of the economy suggest that the real interest rate is determined by the equation.
r=8.5-%triangleY
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