If inflation has been running -1%, what real interest rate does a Fed Funds rate of 0% correspond to?
Real interest rate = nominal rates - inflation
Real interest rate = 0% - (-1%)
Real interest rate = 1%
So, real interest rate will be 1%.
If inflation has been running -1%, what real interest rate does a Fed Funds rate of 0% correspond to?
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Given the Taylor Rule, if nominal inflation is 4.3%, the FED target inflation rate is 2%, the real Fed Funds rate is 0.7%, the log of real output is 3.0155, and the log of potential output is 3.0445; what should the be the FED’s Fed Funds target rate?
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If the nominal interest rate is 2% and the real interest rate is 1%, inflation is:A. -1 %.B. 0 %C. 1 %.D. 2 %.