A columnist in the Economist asserts: I would argue that the Fed has been targeting very low
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A columnist in the Economist asserts: “I would argue that the Fed has been targeting very low inflation, and falling inflation expectations imply much lower interest rates in future.”
a. Will falling expectations of inflation lead to lower nominal interest rates, lower real interest rates, or both? Briefly explain.
b. If the Fed wanted to raise expectations of inflation, what actions might it take?
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Related Book For
Money, Banking, and the Financial System
ISBN: 978-0134524061
3rd edition
Authors: R. Glenn Hubbard, Anthony Patrick O'Brien
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