Consider the monetary rule
)If the inflation rate is 4 percent,the marginal product of capital is 2 percent,and the target rate of inflation is 3 percent,then the real interest rate should be:
A)3.50 percent.
B)3.25 percent.
C)2.25 percent.
D)1.75 percent.
E)2.50 percent.

Question

Consider the monetary rule 
)If the inflation rate is 4 percent,the marginal product of capital is 2 percent,and the target rate of inflation is 3 percent,then the real interest rate should be:
A)3.50 percent. 
B)3.25 percent. 
C)2.25 percent. 
D)1.75 percent. 
E)2.50 percent.

Quizplus · Accepted Answer

The Answer of Consider the monetary rule 
)If the inflation rate is 4 percent,the marginal product of capital is 2 percent,and the target rate of inflation is 3 percent,then the real interest rate should be:
A)3.50 percent. 
B)3.25 percent. 
C)2.25 percent. 
D)1.75 percent. 
E)2.50 percent.

Consider the Monetary Rule