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Consider an alternative simplified version of the Taylor rule, where monetary policy depends only on short-run output: Rt - r= n(~Yt). (a) Draw an IS-MP diagram, but instead of the usual MP
John Taylor of Stanford University proposed the following monetary policy rule: R_t - r= m(p_t - p)+nY_r That is, Taylor suggests that monetary policy should increase the real interest rate whenever o
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