Read the following news extract and answer the question below. News extract 3 When the globe...

   

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Read the following news extract and answer the question below. News extract 3 When the globe was hit by pandemic-related economic disruption, the US government responded by providing relief to their affected citizens in the form of direct cash payments, interest rate cuts, lending programmes and quantitative easing. This was one of the most generous fiscal responses to the virus globally. There was a catch, however: US prices rose by rates not seen in decades, making it clear that the stimulus came at a significant, unintended cost, namely inflation. Adapted from: Source: 1. https://fivethirtyeight.com/features/were-the-stimulus-checks-a-mistake/ https://www.investopedia.com/government-stimulus-efforts-to-fight-the- 2. covid-19-crisis-4799723 You are an economic adviser to the US Central Bank. With reference to news extract 3, you have been asked to advise the US Federal Reserve Bank on the following: (i) the type of inflation that is triggered and why (Also explain the influence of this inflation on the distribution of income and wealth among economic participants.) (ii) the appropriate steps to address the inflation. (8) Read the following news extract and answer the question below. News extract 3 When the globe was hit by pandemic-related economic disruption, the US government responded by providing relief to their affected citizens in the form of direct cash payments, interest rate cuts, lending programmes and quantitative easing. This was one of the most generous fiscal responses to the virus globally. There was a catch, however: US prices rose by rates not seen in decades, making it clear that the stimulus came at a significant, unintended cost, namely inflation. Adapted from: Source: 1. https://fivethirtyeight.com/features/were-the-stimulus-checks-a-mistake/ https://www.investopedia.com/government-stimulus-efforts-to-fight-the- 2. covid-19-crisis-4799723 You are an economic adviser to the US Central Bank. With reference to news extract 3, you have been asked to advise the US Federal Reserve Bank on the following: (i) the type of inflation that is triggered and why (Also explain the influence of this inflation on the distribution of income and wealth among economic participants.) (ii) the appropriate steps to address the inflation. (8)

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i Type of Inflation and Influence on Income and Wealth Distribution The inflation triggered by the pandemicrelated economic disruption and the subsequ... View the full answer