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Q. Nominal interest rate and expected inflation?
When we have inflation, we can't, of course, presume that expected inflation is zero. So real interest rate will no longer be equal to nominal interest rate and we should use R = r + pe. Expected inflation pe is exogenous (even though not essentially constant. In more advanced Keynesian models you would find numerous assumptions on how expectations are formed.
Q. Important points about the classic model? The most important points about the classic model are as following: Monetary and fiscal policy can't affect the GDP or unem
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I want to know price and estimate time on this assignment.
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