Write down an expression for the Taylor rule. How does using the Taylor rule change the response of short-run output and

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Write down an expression for the Taylor rule. How does using the
Taylor rule change the response of
short-run output and inflation to a price shock in comparison to
our simple monetary policy rule?

Explain how financial frictions are introduced into the AS/AD
framework. Explain why the real
interest rate used in the Investments and Savings curve is
different from the real interest rate controlled by the central
bank.
Derive the new version of the AD curve and explain how it shifts
with a financial shock.