The FED uses a bunch of different data
to develop its monetary policy. Open a new document in Microsoft
Word and title it "Fun at the FED!" and we'll explore
some of this data.
Please go to the New
York Fed and click on "Research" and "National
Economy .” Now click on “Economic Indicators Pages.”
![](images/index.1.jpg)
First, look at "Real GDP"
chart on the PDF document "U.S. Aggregate Demand
and Industrial Production."
[Note
that the chart is showing percentage change from the previous
quarter. So the drop from the 2nd quarter of 1996 to the 3rd
quarter of 1996 is not a decrease in GDP but a decrease in
the rate of growth of GDP. Click
here to learn more about how to read this chart.]
- The traditional definition
of a recession is two or more consecutive quarters of declining
GDP. If we accept that definition, how many recessions have
we had since 1990?
-
In
what quarter of what year did the most recent recession
begin?
-
In
what quarter of what year did the most recent recession
end?
- Are we in a recession now?
-
Can
you think of anything that might have caused the dip in
GDP in the 3rd quarter of 2001?
Then, look at CPI Inflation.
[CPI stands for the Consumer Price Index.]
-
What
effect did the recent recession have on consumer prices?
- Skip #s 7-9 on your Word
document please.
Now, look at Money
Growth Rates: M1, M2, and M3. Look at the M2 chart,
specifically the blue line showing changes in the level of
the money supply from a year earlier.
-
Before
interpreting the chart, copy and paste the definition
of M2 found here
into your Word document.
- What was the FED doing with
the money supply to try to counteract the recent recession?
-
What
has the FED been doing with M2 more recently?
-
What
is the FED's goal when it reduces the money supply?
Now switch to home page of
the FED site.
-
What
is the currently targeted federal funds rate?
-
Speaking
of Federal Funds Rate, find a definition of it and paste
it in as answer #15.
Now go to
the
Minneapolis FED's "CPI Calculator."
-
Figure out
how many dollars it would take today (or the most recent year that the
calendar will display) to equal $100 in the year you were born. Write
this down, together with the year of your birth.
-
Using
the CPI Index Calculator at the Minneapolis FED's site,
compare each of the six movies in the Star Wars saga.
After adjusting
for inflation (using the date of original release
as the basis for the calculations), which of the movies
had the highest adjusted-for-inflation gross?
-
And which
the lowest?
The end! |