- If potential real GDP is 8000, and actual real GDP is 8240, what is the percentage output gap? _________

- If potential real GDP is 9000, and actual real GDP is 8550, what is the percentage output gap? __________

- If the target real federal funds rate is 3% and inflation is 2.5%, what is the Fed’s target nominal federal funds rate? __________

- If the target nominal federal funds rate is 5% and inflation is 3%, what is the target real federal funds rate? __________

- If the neutral real rate of interest is 2.5% and the inflation and output gaps are both zero, what is the Fed’s target real federal funds rate? _________

- Assume the neutral real rate of interest is 2%, a target rate of inflation of 2% and a
_{y}and a_{π}are both 1. With an excess demand from a 3% output gap increasing inflation to 5%, what is the Taylor Rule target real federal funds rate? ________

- Given your answer to #6 above, what should the target nominal federal funds rate be? _________

- Assume the neutral real rate of interest is 2%, a target rate of inflation of 2% and a
_{y}and a_{π}are both 1. With an adverse supply shock creating a negative output gap of 2% and inflation rising to 4%, what is the Taylor Rule target real federal funds rate? ________

- Assume the neutral real rate of interest is 2%, a target rate of inflation of 2% and a
_{y}and a_{π}are both 1. With a recession creating an output gap of -3% and inflation falling to 0%, what is the Fed’s target real federal funds rate by Taylor’s Rule? ________

- Explain whether the Fed will be able to move the real federal funds rate to the target value in #9 above.