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Consider the Monetary Rule

Question 54

Multiple Choice

Consider the monetary rule Consider the monetary rule . If the inflation rate is 4 percent, the marginal product of capital is 2 percent, and the target rate of inflation is 3 percent, then the real interest rate should be ________ percent. A) 3.50 B) 3.25 C) 2.25 D) 1.75 E) 2.50 . If the inflation rate is 4 percent, the marginal product of capital is 2 percent, and the target rate of inflation is 3 percent, then the real interest rate should be ________ percent.


A) 3.50
B) 3.25
C) 2.25
D) 1.75
E) 2.50

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