macro graphs.pdf - Cabrera Maxey Uchiyama 1 Alia Maxey Owen Cabrera Kakeru Uchiyama Professor Ball Macroeconomics 202 10 June 2019 1980-1990 Economy CPI

macro graphs.pdf - Cabrera Maxey Uchiyama 1 Alia Maxey Owen...

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Cabrera, Maxey, Uchiyama 1 Alia Maxey, Owen Cabrera, Kakeru Uchiyama Professor Ball Macroeconomics 202 10 June 2019 1980-1990 Economy CPI: U.S. Bureau of Labor Statistics, Consumer Price Index for All Urban Consumers: All Items [CPIAUCSL], retrieved from FRED, Federal Reserve Bank of St. Louis; , June 10, 2019. World Bank, Inflation, consumer prices for the United States [FPCPITOTLZGUSA], retrieved from FRED, Federal Reserve Bank of St. Louis; , June 10, 2019. Inflation, consumer prices for the United States (blue) Consumer price index for All Urban Consumers in the US (red) The Consumer Price Index for All Urban Consumers: All Items (CPIAUCSL) is a measure of the average monthly change in the price for goods and services paid by urban consumers between any two time periods Between January 1981 and November in 1982, there is a recession. This recession caused by oil shock in 1979. The price of oil went up more than doubled $39.50 per barrel over the next 12 months. During this period, the price level as a whole increased. When it happens, this most likely to be caused by an inflation. However, it is different in this period because prices kept going up but the inflation rate kept decreasing. Because oil is a commodity product, it is different. When commodity prices go up, aggregate supply curve shifts to the left. However, at that time, the US economy was already in the inflation for a long time. That's why when a commodity price goes up, just prices increase and inflation rate decreases.
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Cabrera, Maxey, Uchiyama 2 Treasury Bill: Board of Governors of the Federal Reserve System (US), 3-Month Treasury Bill: Secondary Market Rate [TB3MS], retrieved from FRED, Federal Reserve Bank of St. Louis; , June 10, 2019. Federal Reserve Bank of St. Louis, 3-Month Treasury Bill Minus Federal Funds Rate [TB3SMFFM], retrieved from FRED, Federal Reserve Bank of St. Louis; , June 10, 2019. 3 month treasury bill: secondary market rate (blue) 1-year treasury constant monetary minus federal funds rate (green) The term treasury bills secondary market refers to the place where the actual transactions occur. We chose these two graphs because there is an interactive relationship between the amount of treasury stock in the market and federal funds rate. In this market, treasury bills are traded based on a certain percentage yield. This yield is obtained after a treasury bill matures. The percentage of treasury bill: secondary market rate in 1981 shows a recession. Because of oil shock, the commodity price goes up, then short run aggregate supply gradually started shifting to the left, at the same time, people would rather save money then to spend. As a result, oil shock led to a recession. In fact, d uring this recession, the percentage of treasury bill largely went down and the difference between treasury constant maturity and federal funds rate became smaller up to around 0%. In order to recover from the recession, the government took place a monetary policy
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