YX=2, I assume you need to get the 'X' and 'Y' alone. Also just for future reference, you're trying to get variables alone and all the numbers on the other side. Lastly, whatever you do to one side you do to the other. Good luck!
Answer:
1.5%
Step-by-step explanation:
According to the Taylor rule, the federal funds rate targeted by the Fed is:
Where AI is the actual inflation (1%), DI is the desired inflation (2%) and PD is the deviation from potential (2%):
The Fed should target a federal funds rate of 1.5%.
First distribute in the 2 on the left side to get 6d+6=7+6d
Then, you would combine the variables to be on one side of the equation by doing -6d. However, this would cancel out the d by leaving you with 0d+6=7. That is the same thing as saying 6=7.
The answer to this equation is no solution because 6 is NOT equal to 7.
It’s the first one! The table shows X going up and Y going down, so the slope would be negative!
