This document contains questions about economic concepts such as inflation, recessions, and monetary policy. It also provides data on the declines in GDP, unemployment, and world trade during the Great Depression and Great Recession. Additionally, it poses questions about what monetary policy the Federal Reserve should pursue in different time periods between the 1950s and 2010s based on the economic conditions of each respective era. The document instructs students to write a letter to the Federal Reserve Chairman outlining whether they support an expansionary or contractionary policy given 2013 unemployment and inflation rates. Finally, it prompts drafting a letter to a Congressman regarding two fiscal policy changes agreed with and their potential effects.

1. Bellringer
1. What would you say about a 10% inflation rate?
2. Why are banks important to our economy?
3. What is a recession?
4. If the US GDP grew by 1.7% last year, were
we in a recession?
5. What part of our government prints our
money?

4. Great
Depression
1929-1933
27% drop in GDP
25% Unemployment
36% drop in World trade
43 straight months of
declining spending !!!!
Source Yoram Bauman, World Bank
“Great
Recession”
Housing Crisis
2007-2009
5 % drop in GDP
10% Unemployment
20% drop in World trade
18 straight months of
declining spending

5. Monetary Policy
Fed’s Tools
Open market operations
Reserve Rate (%)
Discount Rate (%)
Lender of last resort

10. What about other countries?

15. What should The Fed do
with interest rates in 1955?

16. What should The Fed do with
interest rates in 1921?
US CPI 1914-1920

17. What should The Fed do
with interest rates in 1982?

18. What should The Fed do
with interest rates in 1982?

19. What should The Fed do
with interest rates in 1991?

20. What should The Fed do
with interest rates in 2010?

21. What should The Fed do
with interest rates in 2010?

22. What should The Fed do
with interest rates in 2013?

23. Fed Chairman game

24. Book 398-407
• Write a 1 page letter to Fed Chairman Ben
Bernanke
• Explain whether you support a expansionary or
contractionary monetary policy in 2013
• Mention what your policy might do to US
unemployment now at 7.5%
• Mention what your policy might do to US
inflation now at 2.0%
• Fed Funds rate now at 0.5 % (50 cents/$100)

25. After Inflation & Unempl sheets
finished
Write a 1 page letter to
Congressman Raul Grijalva
2 fiscal policy changes you
agree with, be sure to
include the effects of those
changes