US High School Economics class: Top Federal Reserve official says market angst over inflation would be ‘red flag’

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Specification:

• Monetary Policy

Click to read the article below and then answer the questions:

Top Federal Reserve official says market angst over inflation would be ‘red flag’

• What does the current US bond market price in as expected inflation over the next five years?

• What do households surveyed by the University of Michigan expect inflation to be over the same five year period?

• How do the two measures compare? 

• Explain why the Fed would want to intervene if the bond market prices in higher inflation, even if it hasn’t happened yet

• What is the “dust in the air” Goolsbee is referring to?

Ariel Slonim at MRU’s Econ in the News