Why do you think the surge in oil prices in 2007-2008 had a much smaller impact on inflation expectations compared with the oil price shocks of the 1970’s?
Answer to relevant QuestionsThe European Central Bank’s primary objective is price stability. Policymakers interpret this objective to mean keeping inflation below, but close to, 2 percent, as measured by a euro-area consumer price index. In ...Is investment sensitive to the real interest rate? Plot since 1990 a measure of the real interest rate based on the difference between Moody’s Baa corporate rate (FRED code: BAA) and a survey of expected inflation (FRED ...After examining Figure 22.6, explain the potential link between innovations in financial markets and output volatility since the 1980s. You should consider both the “Great Moderation” and the recession of 2007-2009 in ...*Suppose a natural disaster reduces the productive capacity of the economy. How would the equilibrium long-run real interest rate be affected? Assuming the central bank maintains its existing inflation target, illustrate the ...Display as a bar chart the periods since 1854 that are designated as U.S. recessions by the National Bureau of Economic Research (FRED code: USREC). Why has the frequency of recessions declined over time? Could improvements ...
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