Connecting Economics and Government

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Paul Solman Video: Steering the Course

Re-explain the analogy between Homer's Odyssey and our economic goals

Charybdis (Unemployment)

Scylla (Inflation)

Achieving the Three Goals

  Unemployment Inflation GDP Growth

Good 6% or less 1%-4% 2.5%-5%

Worry 6.5%-8% 5%-8% 1%-2%

Bad 8.5 % or more 9% or more .5% or less

The governments role is to prevent unemployment and prevent inflation at the same time.

•If the government focuses too much on preventing inflation and slows down the economy we will have unemployment. •If the government focuses too much on limiting unemployment and overheats the economy we will have inflation

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Connect this cartoon to the article?

Consumer Confidence

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Stossel Video:

The Broken Window Fallacy

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