topic 7: Recessions & Monetary policy

Question 1

Monetary policy slow in changing
expansionary stance when recovery from pandemic happened, branded
by the slow recovery from the Great recession. Monetary policy also
interpreted supply bottleneck and energy price shocks as temporary
mark-up shocks (declining SAS curve) rather than shift in potential
output. This can lead to opposite conclusions about the optimal federal
funds target rate.

Answer 1

Causes of 2022 inflation

Question 2

both negative supply shocks and excess aggregate demand growth are the causes of the _________

Answer 2

2022 inflation

Question 3

Why do we see high inflation?

Answer 3

Shocks and Misdiagnoses & Inflation expectations

Question 4

determines the cost of short-term (interbank) borrowing. Used to stimulate the economy or prevent it from overheating. Aside: yield curve inversion signals “bad” long-term outlook

Answer 4

Federal Funds Rate