Purves Says Fed Will Have to Reevaluate 2% Inflation

The video discusses the unexpected economic changes and inflation concerns faced by central banks. It highlights the challenges in using traditional economic models to address inflation, especially with technological advancements affecting labor and resource supply. The Federal Reserve's strategy in managing inflation risks is also examined, considering the potential for inflation breakout and the presence of deflationary forces globally.

What is considered the most challenging issue for global central banks?

• Interest rates

• Inflation

• Currency exchange

• Trade deficits

How does technological advancement affect the supply of labor?

• It has no effect on labor supply

• It creates an infinite supply of labor

• It decreases the need for labor

• It reduces labor costs

What is one way technology has increased the supply of a key resource?

• By creating shale technology

• By increasing labor costs

• By reducing oil consumption

• By limiting resource availability

What inflation rate is the Federal Reserve considering as a potential risk?

• 3.5%

• 5%

• 1%

• 2%

What is one reason the Federal Reserve might take the risk of higher inflation?

• To reduce national debt

• To increase interest rates

• To manage global trade

• Due to deflationary forces worldwide