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1951 Treasury-Federal Reserve Accord
ECO 202Monetary Policy Action: Increase interest ratesIntended effects:Decrease expected inflationincreased interest rates curtail spending, which slows the economy and decreases inflationThis will cause a shift in the aggregate demand from ADI to ADII. ShiftsFIGURE NINE: FreeEconHelp, Aggregate Demand Shifts
ECO 202Monetary Policy Impact- Did it Work?Not Quite.Inflation was not as bad as expectedInterest rates were still increased to combat the inflationDemand-driven recessionFIGURE TEN: FEDERAL FUNDS RATE AND EXPECTED INFLATION, Romer & Romer. Retrieved from
ECO 202What Caused the Economic Boom of the 50s?End of WWII & the GI Bill Housing boom, baby boom, creation of suburbsRise of consumerism and credit spendingAverage of 5% GDP growthInterstate Highway Act & GI BillAverage unemployment rate of 4%Marshall Plan & GATT/WTOIncreased trade- Average trade surplus of 1% of GDPWars & RecessionsRevenue acts to fund warsStruggles to control inflationCreation of the Treasury-Federal Reserve Accord
ECO 202“Agree/Disagree”GI Bill Interstate Highway ActIncreasing interest ratesRevenue Act of 1950
ECO 202ReferencesAmadeo, K. (2019, February 28). Compare Today's Unemployment with the Past. Retrieved from -year-3305506Blas, E. (2010). The Dwight D. Eisenhower National System of Interstate and Defense Highways: The Road to Success?The History Teacher, 44(1), 127-142. Retrieved from Bureau of Labor Statistics. (2018, April 13). Consumer Price Index Frequently Asked Questions. Retrieved from Question_11FDIC. (2014, January 2). The 1940s. Retrieved from mlHetzel, R. L. (2013, November 22). From WWII to the Treasury-Fed Accord. Retrieved from _the_treasury_fed_accordHilinksi, C. (1951). Some Comments on the Revenue Act of 1950.