How did this increase affect the mp curve and the output gap

Reference no: EM131305918

1. When the Federal Reserve lowers the real interest rate, what happens to the output gap and to the actual inflation rate?

2. What is the default risk premium, and why did it dramatically increase during the 2007-2009 recession? How did this increase affect the MP curve and the output gap?

Reference no: EM131305918

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