You Are a Newly Hired Reporter for the Daily Tribune

question 76

Essay

You are a newly hired reporter for the Daily Tribune and have been asked to track the Fed's Federal Open Market Committee (FOMC)to report what the likelymonetary policy will be.On April 28,2010 the FOMC statement reads:
Information received since the Federal Open Market Committee met in March suggests that economic activity has continued to strengthen and that the labor market is beginning to improve.Growth in household spending has picked up recently but remains constrained by high unemployment,modest income growth,lower housing wealth,and tight credit.Business spending on equipment and software has risen significantly;however,investment in nonresidential structures is declining and employers remain reluctant to add to payrolls.Housing starts have edged up but remain at a depressed level.While bank lending continues to contract,financial market conditions remain supportive of economic growth.With substantial resource slack continuing to restrain cost pressures and longer-term inflation expectations stable,inflation is likely to be subdued for some time.(Press Release,FOMC,April 28,2010,source: federalreserve.gov/newsevents /press/monetary/20100428a.htm)
What does the FOMC statement suggest the Fed thinks about current economic conditions and what it intends to do in the near future?

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Definitions:

Motive

A need or want that is strong enough to cause the person to seek satisfaction.

Locus of Control

A psychological concept referring to an individual's belief about how much control they have over the outcomes of events in their lives.

Satisfaction

A measure of how products or services meet or surpass customer expectation.

Postpurchase Cognitive Dissonance

The psychological conflict or anxiety that consumers may experience after making a difficult purchase decision, often involving doubt about the purchase.