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ECA 251-002 - Fall 2019: Money and Banking

Date: 9/19/2019

Read every word of the report handed out in class (Federal Reserve issues FOMC statement) for Tuesday Aggregate Supply Total quantity of output producers are willing and able to supply at alternate price levels.

Comic Book on inflation chapters 1 & 12 SLACK For the graph above At A) Would pump into the economy At B) Decrease the money supply

Nairu terminology is the lowest level of unemployment compatible with non-accelerating inflation – definition of full employment . Dual Mandate: Full employment and stable prices Study that report. Dual Mandate is the goal of the feds but the when are we achieving the dual mandate is when we are achieving nairu. Nairu helps us understand as to when we accomplish that goal. Professor can call that a floating target depending in the time in our history. The unemployment rate is above nairu, there is SLACK in the labor market. There is few jobs available but many candidates available.

If the unemployment rate is below nairu, there shall be high inflation. If firms are looking for employees but there isn’t enough labor, wages shall rise, prices will rise and that shall result in a recession occur. Nairu is also the natural rate of unemployment, page 347. Chapter 1 and 12 are soft chapter What is the definition of money supply...