HW 5 Solutions - 330 - (atbeginningofclass 1 Problem2.5intextbook,chapter15,page482(problem2.8,page475in1stedition 2

HW 5 Solutions - 330 - (atbeginningofclass 1...

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Economics 330Problem Set 5 SolutionsDue Thursday April 30th (at beginning of class)1)Problem 2.5 in textbook, chapter 15, page 482 (problem 2.8, page 475 in 1stedition)
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2)Problem 2.7 in textbook, chapter 15, page 482 (problem 2.10, page 475 in 1stedition)
3)Describe the Taylor rule. If the Fed were following the rule, what would the nominal Fed funds rate beif inflation over the past year were 4% and output were 1% below its fullemployment level?

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