The monetary policy curve

    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?    

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