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. Consider three alternative policies, each with a different

Paper help Economics . Consider three alternative policies, each with a different

Economics

. Consider three alternative policies, each with a different

. Consider three alternative policies, each with a different set of outcomes in terms of output a… Show more . Consider three alternative policies, each with a different set of outcomes in terms of output and inflation, as shown in following table: Output Output Output Inflation Inflation Inflation Policy A Policy B Policy C Policy A Policy B Policy C 500.0 500.0 500.0 3.0 3.0 3.0 515.0 500.0 520.0 3.0 2.8 3.2 530.5 520.0 535.0 3.0 2.0 4.0 546.4 540.0 550. 3.0 1.5 4.5 562.8 562.8 562.8 3.0 1.5 4.5 Potential output is 500 in period 1 and rises 3% per year. The Fed’s objective function is ?{-2+(w x -2)} yt nt where w=1, and the inflation target is 2.0%. A. Calculate the value of the objective function over the 5-year period for each of the 3 policies. B. Which policy is best? Why? C. Would the answer to part B change if w =5? If so explain. • Show less

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