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Suppose the Economy Is in a Boom in Which Real

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Suppose the economy is in a boom in which real GDP is greater than potential GDP. The rate of inflation, however, remains at the target level set by the Fed. Suppose that financial markets are convinced that higher inflation is imminent and, in agreement, the Fed decides to increase interest rates.
Suppose the economy is in a boom in which real GDP is greater than potential GDP. The rate of inflation, however, remains at the target level set by the Fed. Suppose that financial markets are convinced that higher inflation is imminent and, in agreement, the Fed decides to increase interest rates.

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