British Monetary Policy and Demand/Supply Shocks

Read the British Treasury's background notes on: The Inflation Target and Remit for the Monetary Policy Council.
a. Summarise the arguments contained in paragraphs (9) - (13).
b. According to this document, when should inflation be allowed to deviate from the target?
c. Use a diagram containing AD and IA curves to illustrate the argument raised in paragraph (26).
d. Use a diagram containing AD and IA curves to illustrate the argument raised in paragraphs (27)-(28). Why does a short-term conflict exist here?

WTRG Economics-Oil Price

Review the historical crude oil prices since 1869.

• Identify when the global economy experienced a significant price shock due to rapidly rising crude oil prices.
• Explain how the inflation adjustment line may have shifted due to the crude oil price or supply shock.
• Review the historical U.S. unemployment rate. Explain when the U.S. experienced "stagflation."