The European Central Bank (ECB) has translated its primary objective of price stability into an explicit, quantitative goal of keeping euro-area annual inflation close to, but below, 2 percent over the medium term. Plot the percent change from a year ago of the euro-area price level (FRED code: CP0000EZ17M086NEST). Evaluate the performance of the ECB on average since 2000 and over shorter intervals. Download the data and compute the average inflation rate for the full period and for the periods 2008-2009, 2010-2011, and 2012-present.
Answer to relevant QuestionsIn 2012, the Federal Reserve announced an inflation objective of 2 percent “over the longer run” for the price index of personal consumption expenditures (FRED code: PCEPI). However, many analysts focus on the “core” ...Does theFederal Reserve frequently purchase or sell gold or foreign exchange as part of its efforts to change the money supply? In which of the following cases will the size of the central bank’s balance sheet change? a. The Federal Reserve conducts an open market purchase of $100 million U.S. Treasury securities.b. A commercial bank borrows $100 ...Looking again at the situation described in Problem14, do you think the size of the banking system’s balance sheet would be affected immediately by these changes to the central bank’s balance sheet? Explain your answer. Suppose the Federal Reserve did not pay interest on excess reserves. How would the reserve demand curve differ from that in Figure?
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