When the global financial crisis of 2008 pushed economies into deep recession with near-zero inflation, central...

  

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When the global financial crisis of 2008 pushed economies into deep recession with near-zero inflation, central banks responded by cutting interest rates to very low levels. Referring to the inflation-targeting model, shown in Figure 1, explain why they did this. Interest rate (%)| Inflation (%)| Figure 1 IVPC The inflation-targeting model IS Output PC = T MR Output When the global financial crisis of 2008 pushed economies into deep recession with near-zero inflation, central banks responded by cutting interest rates to very low levels. Referring to the inflation-targeting model, shown in Figure 1, explain why they did this. Interest rate (%)| Inflation (%)| Figure 1 IVPC The inflation-targeting model IS Output PC = T MR Output

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The inflationtargeting model as shown in Figure 1 is a framework used by central banks to manage inf... View the full answer