Exam - Pennsylvania State University
The Fed lowered the federal funds rate by an average of 5.79% to fight the most previous 3 recessions (accept any answer over 5% but less than 6%) - if the neutral real rate stays at .5%, the neutral federal funds rate is 2.5% (.5% + 2%) the fed will not have nearly enough ammunition (bullets = 2.5%) to fight the next recession, this is a BIG DEAL! ................
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