1. a) In the recent past, Japan and Argentina have had completely different experiences in terms of inflation dynamics. Japan experienced neither sustained inflation nor disinflation, whereas Argentina had very high inflation rates. How would a cut in the target inflation rate affect expectations in the two countries? What does this imply in terms of short-run and long-run Phillips curves?

b) Can it be argued that a higher that an average rate of inflation will benefit students if they spend the proceeds of their student loans quickly, given that the real value of their repayments will be less due to the changing value of money? Given that higher inflation is normally associated with lower unemployment, would this situation not be the best of all worlds for students as it may help them to get jobs more easily on graduating from university?