Reaction Paper Essay Example | Topics and Well Written Essays - 500 words - 1

Reaction Paper - Essay Example Inflation would be higher than predicted, and consumer prices would rise by 3 percent in the year, .6 percent higher than the previous forecast. The higher forecast reflected the rise in energy prices. 2. Economic Issues: These involved macroeconomic theories, and the article examined the economic growth figures and forecasts in order to determine the state of the economy, using GDP as a measure of that. In other words, the production and consumption based US economy was looking 'solid', suggesting a better standard of living for the population. But the unemployment figures of 4.7 percent and due to rise in the following year that were also discussed, meant that not everybody would benefit from expansion. Linked to the period of prosperity indicated by the GDP forecasts, was a rise of 3.0 percent in inflations, suggesting a cost-push inflation model, due to increases in producer's costs, in this case, attributable to rises in energy prices. 3. Policy Recommendations: To combat inflation and reduce unemployment, government intervention is required. This could include cuts in taxation, government spending, for example on armed forces and conflict involvement, a drain on any economy, and more investment in education, training, and technological advancement.