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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.
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Hello, how to cure inflation, particularly addressing rising food prices thanks Gedanken
determinants of money supply
what is Y = C(Y,T) + G + I(r)
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