Intermediate Macroeconomic Theory
Economics 4002.01
Intermediate Macroeconomic Theory
Discussion Board Assignment Week 11: Federal Reserve Beige Book
This assignment is designed to familiarize you with Federal Reserve bank reports on inflation, production, and unemployment. Specifically, you will be looking at the Beige Book. The Federal Reserve System (FED) website includes links to the Beige Book, Minutes of the FOMC meetings and other policy and regulatory information they issue.
The website for Federal Reserveis:https://www.federalreserve.gov
Along the top of this page you will see a tab for monetary policy. Click on that tab and then look under reports for the link to the Beige Book reports. Open the Beige Book reportreleased on October 2nd and read the national summary statement. Also read the report from the Cleveland district. Make notes of key pieces of information and any differences between the national summary and the report from the Cleveland bank.
Your assignment is to identify two key points from the report and two questions that you have about the report. Describe the key points and explain why you found them significant. Use your knowledge of the AS/AD model in your discussion. Your questions should reflect something you don’t understand, something you would like more information on, or something that you think is important that has not been brought out in the report. Explain why you believe your question is important.
You will also be expected to a reply to at least two other posts. Read other posts before adding your post. If you see a question or key point has already been addressed, try to focus on something different.
This assignment is worth 15 points.
Discussion Board Rubric:
Your posts and replies to the Discussion Board will be judged using the following criteria.
| Follows Instructions | Grammar | Clarity | Timeliness | Critical Thinking | |
| 3 points | Followed all the instructions | 0 to 1 error | Clear and to the point | All required posts are completed early enough to allow others to read and reply to them | Shows a strong understanding of the concepts and how to apply them |
| 2 points | Followed most of the instructions | 2 to 4 errors | Clear or to the point | All required posts are completed, but some not early enough to allow others to read and respond | Shows an understanding of the concepts and how to apply them |
| 1 point | Followed some or none of the instructions | 5 or more errors | Neither clear nor to the point | Some or all required posts missing or late | Shows a poor understanding of the concepts and how to apply them |
Reply 1
- I think one important point is reports from Cleveland show that because of the Covid-19 the labor force is in shortage and some of companies would rather forgo the oppoturnity to make capital expenditure. Without enough employee, even though companies made some capital expenditure, it is only waste of money.
- The other important point is that the real estate sales are increasing. The reason I think this is important is that because of the favorable interest rate people are more tend to buy house property. By giving the favorable interest rate for loan, the government can increase its money supply and then shift the Aggregate demand curve to the right to deal with the emergency of Covid-19.
Questions: 1. The reports said the auto dealers’ sales are increasing in last two months. However, from my perspectives, I think with the impact of Covid-19, the disposble income of a household should decline, because they need to buy extra inventories, which leads to the AD curve for automoblie to shift to the left. However, the sales are still going up.
- And the other question is about freight. On the report, it said that the demand for freight services increased over the reporting period, driven by an increase in e-commerce and ongoing resumption in economic activity. However, as the biggest trading parterner with U.S, China has published several policies to prevent the covid virus going in mainland with freight. I wonder if the trading with China is declining, how can the overall freight still be increase.
Reply 2
One key point from the report is that employment increased in almost all Districts and wages increased slightly in most Districts. This is important because it indicates that the economy is in recovery. The wage rate is determined by the intersection of AS and AD.
Another key point from the report is that retail gas prices declined. This is a continuation of the effect of AD declining as people around the world stay home to avoid spreading the coronavirus.
In Cleveland, saving > expenditures, which does not help with economic growth. Additionally, there are labor shortages.
Question 1: Why are there labor shortages (a shift of the AS curve to the left) in Cleveland when overall wages across the country are increasing?
Question 2: It is interesting that there is currently so much foreign demand for US goods from China. Why do you think this is? The U.S. goods and services trade deficit with China was $308.8 billion in 2019. Do you think that it will be less this year, given the public fear surrounding coronavirus?
