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Question - Kim Kimchi Co produces three kinds of Kimchi Regular, Premium, and Extra. The company has 17 tons of Napa cabbage available to produce kimchi this season. A vat of Regular requires 0.21 ton of cabbage, a vat of Premium requires 0.24 ton, and a vat of Extra requires 0.18 ton. The cellar has enough storage space in its aging room to store 80 vats of kimchi. The cellar has 2,500 hours of production capacity, and it requires 12 hours to produce a vat of Regular, 14.5 hours to produce a vat of Premium, and 16 hours to produce a vat of Extra. From past sales the company knows that demand for the Extra will be no more than half of the sales of the other two kimchi combined. The profit for a vat of Regular is $7,500, the profit for a cask of Premium is $8,200, and the profit for a cask of Extra is $10,500. How many vats of each type of kimchi should Kim produce in order to maximize their profits?
Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest. How much control does the Fed have over this longer real rate?
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