If $\bar { r } = 2 \% , \bar { m } = .75$

question 9

Essay

If $\bar { r } = 2 \% , \bar { m } = .75$ , and $\bar { \pi } = 2 \%$ , what would the simple monetary rule dictate the real interest be if $\bar { \pi } _ { t } = 5 \%$ ? If $\pi _ { t } = 2 \% , \pi _ { t } = - 2 \%$ ? In each case, is the economy in an expansion, recession, or in the long run?

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Definitions:

Government-provided Health Insurance

Health insurance schemes funded and managed by the government to offer medical coverage to its citizens.

Insurance Exchanges

Government-regulated markets for health insurance in which individuals seeking to purchase health insurance to comply with the personal mandate of the Patient Protection and Affordable Care Act (PPACA) of 2010 will be able to comparison shop among insurance policies approved by regulators. Each state will have its own exchange.

Government-set Standards

Regulations established by government bodies to ensure quality, safety, and fairness in the production, provision, or use of goods and services.

Efficiency Loss

The loss of economic efficiency that occurs when the competitive equilibrium in a market is not achieved or is distorted.