part B 7. In the Financial Times article "UK businesses expect prices to soar in the coming year"(3 March 2022) we can read:"British businesses expect inflation to rise at its fastest pace for five years, according to aBank of England survey, [..]the Bank of England have often quoted high business inflation expectations [...] in recentmonths to support the need for further monetary policy tightening."(a) Explain why the central bank considers business experdecisions on monetary policy.ations when making(b) In February 2022, inflation in the UK was expected to increase to close to 6% inFebruary and March, before peaking at around 7 %% in April. Despite this, theMonetary Policy Committee in the Bank of England increase the policy rate to 0.25%to 0.5%, even if some members recommended an increase to 0.75%.Using the 3-equation model, depict the UK economy in February 2022, and providesome reasons why the Bank of England did not increase the interest rate to 0.75%(or higher).

It includes the board of cash supply and loan fee and is the interest side economic policy utilized…

7. In the Financial Times article "UK businesses expect prices to soar in the coming year" (3 March 2022) we can read: "British businesses expect inflation to rise at its fastest pace for five years, according to a Bank of England survey, [...] the Bank of England have often quoted high business inflation expectations [...] in recent months to support the need for further monetary policy tightening." (a) Explain why the central bank considers business expectations when making

7. In the Financial Times article "UK businesses expect prices to soar in the coming year" (3 March 2022) we can read: "British businesses expect inflation to rise at its fastest pace for five years, according to a Bank of England survey, [...] the Bank of England have often quoted high business inflation expectations [...] in recent months to support the need for further monetary policy tightening." (a) Explain why the central bank considers business expectations when making

Principles of Economics, 7th Edition (MindTap Course List)

7th Edition

ISBN:9781285165875

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter35: The Short-Run Trade-off Between Inflation And Unemployment

Section: Chapter Questions

Problem 5PA

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How does a monetary policy of inflation target work?
Briefly describe how the Fed would use its three main policy tools to bring inflation down. (1) The Fed should increase or decrease the benchmark rates such as Fed funds rate? Briefly explain Why. (2) The Fed should buy or sell Treasury securities? Briefly explain Why. (3) The Fed should increase or decrease the bank reserve requirement ratio? Briefly explain Why.
What Can the Fed Do about Inflation? In the article by Thomas Hogan, we learn that Russia's invasion of the Ukraine nor the shortage or supply chain issues has not derived the main causes of inflation. (Hogan, 2022) The main cause for the issues that we have been facing come directly from the constant price changes and the monetary policy that is currently in place. We learn that with Federal Open Market Committee (FOMC) has not adjusted their monetary policy, and have been raising the rates in such small increments that is causing the inflation to continue in an upward trend. What needs to occur is the FOMC needs to raise interest rates in greater scales in order the combat the inflation that is taking place and stabilize the price levels that are out there. (Hogan, 2022) What needs occur is that the Fed needs to come up with a policy that will allow for a predetermined path that slows down and regulating the money growth back to a safe place. Having the guidance from the article…
What measures should the central bank take to reduce inflation? Show by drawing a graph.