When we speak about financial education as a lay person, we are usually referring to a set of skills that allow people to manage their money wisely, some understanding of essential financial concepts and an appreciation of the trade-off between risk and return. But let us ponder a bit deeper for a while, is it only this?
It is tempting to assume that forecast misses for unemployment and inflation would be negatively correlated; if unemployment is surprisingly low, then inflation would be surprisingly high. This would be consistent with demand shocks. But, in reality, there is not much correlation. Supply shocks – where, for example, both unemployment and inflation were surprisingly low – have been about as common as demand shocks.