1.  Write the letter of the definition in the blank next to the term that it describes

_____ consumer price index

_____ Federal Reserve Board

_____ inflation

_____ monetary policy

_____ interest rate

_____ housing bubble

_____ econonmist

_____ baby boomers

a - An increase in the general price level of goods and services; alternatively, a decrease in the purchasing power of the dollar.

b - an expert in the science of economics

c - Measures the change in the cost of living for most American families. Widely followed as an indicator of inflation of retail purchases.

d - The cost of borrowing money, expressed as a percentage, usually over a period of one year; The percentage of an amount of money which is paid for its use for a specified time

e - someone born in a period of increased birth rates, such as those following World War II. In the U.S., demographers have put the generation's birth years at 1946 to 1964

f - a tool by which government can influence the economy by affecting interest rates. In the case of the US, the Federal Reserve Board may choose to increase interest rates thereby slowing the economy and dampening inflation, or decrease interest rates which may stimulate the economy by stimulating investment and consumption

g - a type of economic bubble that occurs periodically in local or global real estate markets. It is characterized by rapid increases in the valuations of real property such as housing until they reach unsustainable levels relative to incomes and other economic indicators, followed by rapid decreases that can result in many owners holding negative equity (a mortgage debt higher than the value of the property).

h - a government appointed organization which runs the central banks in the USA; A group of economists and other experts who set the nation's monetary policy. The board's most powerful tool to control inflation is the power to control interest rates.

2.  Name the current and the past two chairmen of the Federal Reserve Board.

3.  How much of an increase was there in the CPI in 2005?  How do you know from para.#2 that that number was a good thing?

4.  In what years did the U.S. have double digit inflation?  Ask your parents or other adults to describe how that double-digit inflation affected them (their experience with jobs, ability to save money, living expenses at that time, etc.)

5.  What happens when inflation is low?  What was impressive about the low inflation during Mr. Greenspan's tenure?

6.  What do critics of Mr. Greenspan say is a result of what they think was his "too easy monetary policy"?