(a)[2]
Using the data in Table 1.1, compare changes in the inflation rate and changes in the interest rate in the US.
(b)[2]
Explain one reason why using the Consumer Price Index (CPI) to measure the inflation rate in the US may not produce an accurate result.
(c)[4]
‘In an attempt to bring about disinflation, the Federal Reserve used a contractionary monetary policy.’ Consider whether disinflation is more harmful than deflation.
(d)[6]
Assess whether increases in the interest rate make a recession in the US inevitable.
(e)[6]
Assess whether the Federal Reserve setting an inflation target as part of its monetary policy is likely to be helpful for the US economy.