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Specification:

  • Monetary policy, labour markets, housing market

Click to read the article below and then answer the questions:

Why are interest rate rises not taming inflation?

  • Identify the central bankers pictured in the article: i) European Central Bank; ii) Bank of England; and iii) US Federal Reserve

  • ‘Monetary policy always comes with a lag, taking about 18 months for the impact of a single rate increase to fully seep through into spending patterns and prices.’ Identify and explain three reasons for the time lags associated with monetary policy

  • Explain why a long-term shift away from manufacturing towards services could result in a slower transmission of a tighter monetary policy

  • With reference to the housing market, identify and explain the two factors which are delaying the transmission of monetary policy

  • Using a diagram, analyse the effect of a tight labour market on the wage rate

Gavin Clarke, Emmanuel College

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