Download DATA WAREHOUSES

Banking with Trust
Student Coaching
1
What is the Case About?
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Review Federal Reserve Stabilization
Policy
Play with Some Economic Numbers
Apply Statistical Regression
Incorporate Findings in Report Intended for
Your Peers at the bank
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Basics of Stabilization Policy
(Standard Fed Version)
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Economy Fluctuates Around a Trend Rate of
Growth
Too Fast Growth is Bad as it Leads to Inflation
Too Slow Growth is Bad as it Causes
Unemployment
Stabilization Policy
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Forecast Inflation and Output Growth in the Near
Future
“Lean Against the Wind”
3
Question 1: Looking at the
Data on the Spreadsheet
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Percent Change = (New Value – Old Value)
Old Value
E. g.
Percent Change = (101 – 100)/100 = .01 or 1%
Inflation is Calculated as the Percent Change in
the GDP Price Deflator
GDP Deflator = 100*(Nominal GDP)/(Real GDP)
E.g. Deflator = 100*(4000)/(5000) = 80.0
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Question 2: Aggregate
Demand – Aggregate Supply
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Aggregate Demand (AD) – Quantity of Goods
and Services that Households, Firms, and the
Government Want to Buy at Each Price Level
Long Run Aggregate Supply (LRAS) –
Production of Goods, Services (Real Output)
Depends on Supply of Labor, Capital, Natural
Resources, Technology – Price Level Does Not
Affect
Short Run Aggregate Supply (SRAS) – Quantity
of Real Output Supply at Each Price Level
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Question 2: Aggregate
Demand – Aggregate Supply
LR A S
Price
Level
SRAS
P
AD
Y
Real Output
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Question 3: Money Supply
and Interest Rates
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Interest Rate (Price of Money) - Determined in a
Market for Loanable Funds
Money Demand Curve Shows Relationship
between Money Demand and Interest Rates
Money Supply – Quantity of Money Fixed by the
Federal Reserve
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Question 3: Money Supply
and Interest Rates
Interest
Rate
MS
R
MD
Money
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Question 5:
Scatter Plot
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Click Insert/Chart/XY (Scatter) then click Next.
Be Sure Cursor is on Data Range Window,
Highlight Two Data Columns, then Click Next.
Add Titles to Chart & Click Next.
Check New Sheet and Click Finish.
Click a Datum Point on Chart with Right Mouse
Key, Add Trendline, & Click Linear.
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Question 5:
Regression Analysis
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Click Data/Data Analysis on right /Regression &
Click OK.
On New Window Check Labels Box and Put
Cursor on X Range.
Highlight X Data Including Label.
Put Cursor on Y Range & Highlight Y Data
(Including Label), Then Click OK.
Click Format/Column/AutoFit to Widen Columns.
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Question 5:
Regression Analysis
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R Square – Coefficient of Determination –
Percent Variation in Rate of Inflation (Y)
Accounted for by Variation in Growth Rate of
Money (X).
X Coefficient Measures Slope of Trend Line.
(Positive Sign - Positive Relationship, Negative
Sign – Negative Relationship)
P-Value Measures Observed Level of
Significance. (Probability of Error)
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