What happens over time to the real interest rate and output

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Suppose the economy starts with output at potential and constant inflation. In 2020, oil prices jump up. Initially, the Fed is accommodative.

In 2023, a new Fed chair is appointed and resolves to return inflation to the level before 2020. Show with graphs what happens over time to the real interest rate, output, and inflation.

Reference no: EM131221611

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