- Which do you think is the greater risk for the U.S. economy in 2022: inflation or deflation? Base your answer on what we’ve discussed in class and your readings, but you may also want to consider this:
has in the 2nd half of this year. How feasible would it be for developing nations to maintain current interest rate levels when the rest of the world is raising interest rates to prevent continued increases in the inflation rate?
- Looking at the chart below, speculate on why Japan’s inflation rate breaks the mold. (I say speculate because no one knows for sure….)
- Central bank independence is taken for granted in developed nations like those in Western Europe and the U.S., but independent central banks are something of a rarity in developing and emerging market economies. What roles does an independent central bank play in a country’s economic and financial development, and how does the absence of an independent central bank jeopardize economic growth?
- The Economist writes: “Cash is a safe asset, but a wasting one. The real returns on risky assets have been much greater. True, cash affords options—to buy cheaply when others are selling. But episodes of distressed selling have been fleeting, largely thanks to central banks, which have been liberal in supplying cash in emergencies.” Why are investors willing to incur the opportunity cost of holding cash in the face of current outsized returns in the equity and bond