Question

Visit the Fed's Summary of Commentary on Current Economic Conditions (Links to an external site.), also known as the Beige Book. Prepare a proposal recommending monetary policy actions designed to correct problems with spending, employment, and prices. Defend your choices.

Answer 1

As per Beige's book report, the US Fed observes that the economy has expanded moderately and prices of consumer goods have risen slightly with mild tinker in inflation growth. Employers have failed to attract and retain skilled labors and overall employment has slightly reduced. As a result wage growth has been witnessed to attract talented labor. Farmer and agricultural income have been mixed overall and due to trade barriers, overall labor wages have been moderate. Spending in the construction sector and investment in the energy sector have seen good traction. The overall money supply is well balanced and is a good indicator of robustness in the economy.

Fed looks to raise interest rates in 2019 twice a year as a moderate long term interest rate forecast.

This strategy is well balanced considering the rise in inflation and prices coupled with a rise in wages and employment opportunities. However, the growth shall be depressed in the short term which is the only drawback, and hence government can expand its economic activity, and trade policies should be easier to bring back growth in real GDP and create strong economy.