Since monetary policy changes through the fed funds rate occur with a lag, policymakers are usually...

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Since monetary policy changes through the fed funds rate occur with a lag, policymakers are usually more concerned with adjus

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Answer 1

Answer #1

Federal funds target rate = inflation rate+real fed funds rate+0.5*inflation gap+0.5*output gap

= 7+4+0.5*(7-3)+0.5*3

= 11+2+1.5

= 14.5%

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Answer 2

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