Tackle the Test: Free-Response Questions

  1. Question

    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

    Rubric for FRQ 1 (6 points)

    1 point: Federal funds rate = 1 + (1.5 × inflation rate) + (0.5 × output gap)

    1 point: It’s not a perfect fit but it is usually a close approximation.

    1 point: It does better than any one measure alone, and it has always correctly predicted the direction of change of interest rates.

    1 point: 1 + (1.5 × 1) + (0.5 × 3) = 4%

    1 point: An increase of 3 (1.5 × 2) percentage points

    1 point: Contractionary monetary policy

  2. Question

    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