a) What three factors have been suggested for the decline in real interest rates in the...

a) What three factors have been suggested for the decline in real interest rates in the world?

b) Explain why the Phillips curve relationship in the basic New Keynesian model takes the form it does.

c) If there is a decline in the natural rate of interest, what problem can this create for monetary policy?

d) How does forward guidance help the central bank deal with a low natural real rate of interest?

Expert Solution

Rahul Sunny answered 7 months ago

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a) What three factors have been suggested for the decline in real interest rates in the...

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