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Unformatted text preview: Feds should be officials in charge of econ, other way around now-Why did greenspan lower interest rates in recession? Labor market needed to fix unemployment Jobloss economy-Idea economy has GDP Growth (2.95-3.5%) Full Unemployement (4.5-5.5%) Stable Prices (1-2% price increase)-Fed Lowers rates Bank sells bonds to Fed Fed gives cash + wants to gain interest Lower interest rates stimulate borrowing-Core Inflation (Core CPI) Food &amp; Energy prices Outside forces = prices, instead of economic forces (ex hurricanes, drought)-CPI includes food + energy Core CPI- w/o food + energy Worst recession with oil shocks-Post recession recovery Unemployment rising/Interest rate drops-Misery Rates High unemployment high in inflation Early 80s Late 90s lowest...
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- Spring '07