Figure 12.17: Real GDP 1993 - 1995
-Consider Figure 12.17, which contains data for actual real GDP (RGDP) and two different potential RGDP estimates labeled RGDP-A and RGDP-B. Suppose "true" potential RGDP is given by RGDP-A, and the Fed believes potential GDP is given by RGDP-B. Consider the two months marked with A points (point 1 is July 1993 and 2 is April 1994); if you were the Fed chairman during these two points, what type of monetary policy would you conduct? How "accurate" would your policy be?

Question

Figure 12.17: Real GDP 1993 - 1995 
-Consider Figure 12.17, which contains data for actual real GDP (RGDP) and two different potential RGDP estimates labeled RGDP-A and RGDP-B. Suppose "true" potential RGDP is given by RGDP-A, and the Fed believes potential GDP is given by RGDP-B. Consider the two months marked with A points (point 1 is July 1993 and 2 is April 1994); if you were the Fed chairman during these two points, what type of monetary policy would you conduct? How "accurate" would your policy be?

Quizplus · Accepted Answer

The Answer of Figure 12.17: Real GDP 1993 - 1995 
-Consider Figure 12.17, which contains data for actual real GDP (RGDP) and two different potential RGDP estimates labeled RGDP-A and RGDP-B. Suppose "true" potential RGDP is given by RGDP-A, and the Fed believes potential GDP is given by RGDP-B. Consider the two months marked with A points (point 1 is July 1993 and 2 is April 1994); if you were the Fed chairman during these two points, what type of monetary policy would you conduct? How "accurate" would your policy be?