Assume the monetary policy curve to be r=1.5+0.75 π
b. Calculate the real interest rate (r) when inflation rate (π) is 2%, 3%, and 4%
c. Draw the MP curve
d. Assume that the Fed change the MP curve to r=2.5+0.75 π. Calculate the real interest rate when inflation rate is 2%, 3%, and 4% and draw the new MP curve.
e. Does the new curve represent tightening or loosening of the monetary policy?