Transcript Good Morning!

8/30/05
Welcome to Money and Banking – Econ
351!
Instructor: Russell P.
Chuderewicz

A little about myself
 Your First Assignment
OUR HOME PAGE
 http://grizzly.la.psu.edu/~rxc122/
 You
will need the username and
password
 User Name: ecochud
 Password: wildflower
 Let’s Go to the Home Page!
Who is arguably the most
powerful person in the world?
Be sure to say a few words about
Chairman Greenspan’s upcoming
retirement.
How do we give a grade to the
economy – that is, how is the
US economy doing?
The three big Macroeconomic
yardsticks!
Unemployment – we want it low but not too
low!!
 Inflation – we want it low and steady – but not
too low – two extremes – deflation (Japan) and
Hyperinflation (Argentina, Brazil, Russia?)
 Economic Growth – we want growth but not too
much growth – referred to as overheating.
Discuss

A look at the unemployment
rate – think about some
optimal level of the
unemployment rate! (explain
why we will always have some
unemployment)
And what about inflation?

Be sure to discuss different measures of
inflation and what the Fed pays most
attention to and why?
 The following graph is the ‘headline’
inflation rate as derived from the consumer
price index.
And GDP growth

Recall that there is some “optimal” rate of
economic growth – what is it referred to as?
Many economists spend a lot
of time trying to forecast the
direction of the economy.

How do they do?
A look at our forecasting
successes (or lack there of)
Tell story about hurricane in
Miami in 2000
Source of the under prediction
of GDP growth
A More Historical Look
Unemployment Rate, 1970 I1997 II
So policymakers have clear
objectives – what are they
again?
Begin Cruise Ship Example