Consider the following simple monetary rules estimated for two different periods, 1969-1985 and 1985-2005, and interpret each rule. During which period does the Fed appear to be most anti- inflation? Explain your answer.
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- Q2. Go to the Statistics Canada website https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=1810000501 to view the annual average Consumer Price Index for Canada. Change the Reference period years from 1999 to 2021 and click Apply to see the updated data table. Answer the following questions and provide data and calculations where necessary. Calculate the rates of inflation between 2018-2019 and 2020-2021. Round your answer to two decimal places.Consider the following expressions: π = πe + ε(un − u) (1) L(u,π) = a(u − un) + π2 (2)1) Assign a label to expression (1) and (2) and interpret them in detail.2) Utilizing expression (1) and (2) find the optimal level of inflation under discretionary monetary policy outlook. Also interpret the derived value.1) https://www.econlowdown.org/resource-gallery/monetary_policy_tools 2) https://www.wsj.com/articles/zimbabwe-money-aa13a052?mod=hp_featst_pos5 3) https://news.sky.com/video/jamaican-bank-releases-reggae-song-on-inflation-12058864 please I need a short summary of these articles.
- Suppose the current monetary policy is r = 1.0 + 0.75π, and the IS curve is given by Y = 13 - r. Calculate the numerical value for (Y) aggregate output when inflation equals 4%. Do not use chatGPT.Which of the following is a policy tool used to combat demand-pull inflation? a) Contractionary fiscal policy b) Expansionary monetary policyWhy are inflation expectations so important to modern monetary policy? What are several ways that central banks try to manage inflation expectations?
- Time Inconsistency of Monetary Policy (All notations are the same as used in the class) Suppose that the Central Bank of Avocado Republic is facing the following Phillips Curve: * = n-0.4 (u - u,) The Central Bank announces a monetary policy consistent with 1% inflation. The natural rate of unemployment (un) is assumed to be 3%. a. Assume that market participants believe in the Central Bank and form the expected inflation equal to 1% (n = 1%) . If the Central Bank follows through with its announced policy, what are the actual inflation rate and the unemployment rate? ;u = b. Assume that the Central Bank weighs more on unemployment than inflation. So, to achieve an unemployment rate at 1 percentage point below the natural rate, what rate of inflation is the Central Bank willing to accept? To achieve an unemployment rate at u = the Central Bank is willing to accept a = c. Do you think people will still believe in the Central Bank's announced policy? (Yes or No)You observe the following short-run Phillips curve for the economy: T = 9.2 -0.26(u - 6.5%) + v. There are no supply shocks to the economy, and the actual unemployment rate is 6.5% (and will stay that way for the foreseeable future). What will expected inflation be next year? Write your answer as a percentage, and round at one (1) decimal. Do not write the percentage sign. If you need more information to answer the question, write "O".Questıon One Zambia has adopted an inflation targeting framework to manage its monetary policy. Using your knowledge of money and banking, elaborate on the key features of the inflation targeting framework and also bring out the positives and negative aspects of such a framework. What key gaps can you isolate that exist in the conduct of inflation targeting for Zambia? You have been appointed as Chief Executive Officer for one of the largest Banks in Zambia. As your first task, you will need to review the Bank’s credit management policies. Based on the paper by George Akerlof on the “Market for Lemons”, write an advisory note (no more than one page) on how the bank can address the challenges of information Asymmetry, Adverse Selection and the Moral Hazard problem in the context of a commercial bank. Ensure to provide practical examples in your illustration.
- Now go to FRED and search for PCEPI. This is the price index that receives the most attention from the Federal Reserve in terms of fulfilling the nominal part of their dual mandate. Calculate the most recent rate of inflation (12 months) using PCEPI to the nearest two decimal places and compare to the Fed's implicit target of inflation = 2%. Is inflation too high, too low, or just right (circle your answer)? TPCE Too high Too low Just rightAssess the impact of money supply changes on inflation with diagramName three (3) policy tools that a Central bank can use to constrain the rate of inflation and explain how one (1) of these works in accomplishing its objective.
