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Hint: A good way to start will be to read the Inflation Report and highlight all the variables that affect the growth rate of prices (e.g. domestic demand, labour costs, etc.). Then, evaluate how these variables will operate in the South West over the next year.
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In contemporary times, monetary policy is evaluated by examining monetary policy shocks represented by changes in nominal interest rates rather than changes in the money supply. In this thesis, we studied three interrelated concepts: the monetary policy transmission mechanism, interest rate spreads and the spread adjusted monetary policy rule.
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