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Figure 12.17: Real GDP 1993 - 1995

Question 57

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Figure 12.17: Real GDP 1993 - 1995 Figure 12.17: Real GDP 1993 - 1995 -Consider Figure 12.17, which contains data for actual real GDP (RGDP) and two different potential RGDP estimates labeled RGDP-A and RGDP-B. Suppose true potential RGDP is given by RGDP-A, and the Fed believes potential GDP is given by RGDP-B. Consider the two months marked with A points (point 1 is July 1993 and 2 is April 1994); if you were the Fed chairman during these two points, what type of monetary policy would you conduct? How accurate would your policy be?
-Consider Figure 12.17, which contains data for actual real GDP (RGDP) and two different potential RGDP estimates labeled RGDP-A and RGDP-B. Suppose "true" potential RGDP is given by RGDP-A, and the Fed believes potential GDP is given by RGDP-B. Consider the two months marked with A points (point 1 is July 1993 and 2 is April 1994); if you were the Fed chairman during these two points, what type of monetary policy would you conduct? How "accurate" would your policy be?

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First, for point 1, we see that RGDP-A ...

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