Explain the unintended consequence

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Central banks engineered a "great moderation" starting in the mid 1980s, resulting in lower, more stable inflation and less violent swings in the business cycle. (i) How did they do it? (ii) What was the unintended consequence-how did better macro policies contribute to the Great Financial Crisis? How have polices adapted to ensure that this does not happen again? (iii) Low and stable inflation poses a challenge to central banks when they want to respond to a shock to the real economy such as a pandemic. What is that challenge and how do they cope with it?

Reference no: EM133065913

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