Fed's monetary policy quesitons
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Transcript of Fed's monetary policy quesitons
Bellringer1. What would you say about a 10% inflation rate?
2. Why are banks important to our economy?
3. What is a recession?
4. If the US GDP grew by 1.7% last year, were we in a recession?
5. What part of our government prints our money?
Great Depression
1929-1933
27% drop in GDP
25% Unemployment
36% drop in World trade
43 straight months of declining spending !!!!
““Great Great Recession”Recession”
Housing CrisisHousing Crisis2007-20092007-2009
5 % drop in GDP5 % drop in GDP
10% Unemployment10% Unemployment
20% drop in World trade20% drop in World trade
18 straight months of 18 straight months of declining spendingdeclining spending
Source Yoram Bauman, World BankSource Yoram Bauman, World Bank
Monetary PolicyFed’s Tools
Open market operationsReserve Rate (%)Discount Rate (%)
Lender of last resort
What about other countries?
What should The Fed do with interest rates in 1955?
What should The Fed do with interest rates in 1921?
US CPI 1914-1920
What should The Fed do with interest rates in 1982?
What should The Fed do with interest rates in 1982?
What should The Fed do with interest rates in 1991?
What should The Fed do with interest rates in 2010?
What should The Fed do with interest rates in 2010?
What should The Fed do with interest rates in 2013?
Fed Chairman game
Book 398-407
• Write a 1 page letter to Fed Chairman Ben Bernanke
• Explain whether you support a expansionary or contractionary monetary policy in 2013
• Mention what your policy might do to US unemployment now at 7.5%
• Mention what your policy might do to US inflation now at 2.0%
• Fed Funds rate now at 0.5 % (50 cents/$100)
After Inflation & Unempl sheets finished
Write a 1 page letter to Congressman Raul Grijalva
2 fiscal policy changes you agree with, be sure to include the effects of those changes