Econ 3 - Module 6 Learning Objectives

Module 6 Overview

Econ 3 - Learning Objectives

Focus: Applying the Tools to 100 Years of U.S. Macroeconomic History

Learning Objectives

By the end of Module 6, you should be able to:

1. Remember the Three EpochsUnderstand and identify the timing and names of the three significant epochs in U.S. economic history:

   • The Great Depression Epoch (1929-1939): Characterized by severe economic downturn and widespread unemployment.

   • The Post-War Expansion Epoch (1945-1973): Noted for steady economic growth, rising productivity, and low unemployment rates.

   • The Neoliberal Era Epoch (1973-Present): Marked by increasing globalization, economic inequality, and fluctuations in employment and productivity.

2. Key Differences Across Epochs Be able to distinguish the epochs based on key economic indicators such as:

   • Productivity Growth: Understand how productivity has changed across the epochs, with focus on innovations during the post-war era and stagnation in the neoliberal era.

   • Unemployment Rate: Recognize the trends in unemployment rates, particularly the high rates during the Great Depression and the fluctuations during the Neoliberal Era.

   • Inequality: Analyze how income inequality has evolved, particularly the widening gap between rich and poor in recent decades.

3. Macroeconomics Examples Explain in simple terms how:

   • The Great Depression: Illustrates concepts of macroeconomics such as aggregate demand drop, bank failures, and overall economic contraction.

   • The Financial Crisis of 2008: Serves as a key example highlighting the role of systemic risk in the economy, housing market collapse, and banking sector instability.

4. Impact of the Financial Crisis of 2008 Recall the various effects on:

   • Unemployment: Significant rise in unemployment, peaking close to 10% post-crisis, with long-term consequences for workers.

   • Inflation: Understand how inflation remained subdued despite initial fears of rising prices due to monetary expansion.

   • Describe how the three stack diagram illustrates these impacts on:

     • Income: Declining incomes for households during and after the crisis.

     • Unemployment: The layered visual representation of rising unemployment rates over time.

     • Inflation: Changes in inflation trends, particularly after the crisis.

5. Policy Responses to the Crisis Discuss the response of both monetary policy and fiscal policy to the crisis using the three stack diagram. Include details such as:

   • Monetary Policy: The Federal Reserve’s lowering of interest rates to near-zero, and the implementation of quantitative easing to stimulate the economy.

   • Fiscal Policy: Government interventions such as the American Recovery and Reinvestment Act of 2009 to foster growth and curb unemployment.

6. Unprecedented Monetary Policy Feature Identify one unique feature of the monetary policy enacted by the Federal Reserve during the Financial Crisis of 2008, such as:

   • Introduction of unconventional tools like forward guidance and large-scale asset purchases, which were not previously used in such magnitude.

   • Highlight the degree of intervention which marked a shift in traditional monetary policy practices.