Economics class: Why are interest rate rises not taming inflation?
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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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