Question: Why is the current inflation in Canada or the US much higher than this target of 2% (5 marks) Use the standard macroeconomic models, Keynesian

  1. Why is the current inflation in Canada or the US much higher than this target of 2%

(5 marks)

  1. Use the standard macroeconomic models, Keynesian and AS/AD, to explain in detail how the Bank of Canada or the Fed is currently trying to reduce inflation to 2%.

You may use graphs to illustrate (15 marks)

  1. Why might the Bank of Canada or Fed's efforts to reduce inflation cause a recession

(5 marks)

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