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1. what is meant by a \" hard - landing\" adjustment to global inbalance? 2. wha

ID: 1178461 • Letter: 1

Question

1. what is meant by a " hard - landing" adjustment to global inbalance?

2. what combination of domestic cionditions would worsen a hard- landing?

3. what specific global imbalance are indentified? why are these of major concern?

4. why do economists disagree about the likelihood of a haerd- landing?

5. why are countries that hold large dollar reserves effectively supporting the U.S dollar and helping the fed keep U.S. inflation and interest rates relatively low?

6. what effects might a decision by these countries to diversify their interrational reserve holdings have on the dollar and what problems might it create for U.S monetary policy?

7.is a hard landing likely to occurr as a result of this diversitication?why?

8. would adoption of format inflation target enhance rate fluctuation's and other international economic shocks? why?

Explanation / Answer

The latest sets of data from China provide a mixed picture at best.

The slowdown is getting obvious on some metrics, although it is not as slow as some would fear at this stage. The bad news is that inflation remains quite high, showing little sign of easing so far. Other data also points to the general picture of continuous reliance on fixed-asset investment as well as stagnant retail sales. On the whole, while it is too early to say with absolute certainty that a hard