1. Visit http://www.minneapolisfed.org/bb/ and summarize in your own words the history and use of the Beige Book.

Your students will find a great two paragraph discussion of the Beige Book's history and use. The information is repeated here for your convenience.

District banks have been printing summaries of the economic conditions in their districts since 1970. Initially this "Red Book" was prepared for policymakers only and was not intended for public consumption. It was made public in 1983. To mark this change, the color of the cover was changed and the publication became known as the Beige Book.

The Beige Book is released two weeks prior to each FOMC meeting eight times per year. Each Federal Reserve Bank gathers anecdotal information on current economic conditions in its district through reports from bank and branch directors and interviews with key businessmen, economists, market experts, and other sources. The Beige Book summarizes this information by district and sector. It is not a commentary on the views of Federal Reserve officials.

2. Use a diagram of supply and demand for labor to explain the wages increases experienced in Kansas City.

For this question students should produce a diagram of supply and demand for labor. The quantity of labor should be measured on the horizontal axis and wages on the vertical axis. By starting out at and equilibrium wage rate they could then show what happens to wages when a market for labor is characterized by a shortage. Since the article only identified a shortage, we are not sure what caused it. A good answer will include two possibilities, one that there was an increase in demand that caused the shortage and resulting increase in wages. Another scenario that suggests there could have been a decrease in supply that caused the shortage and increase in wages.

Multiple Choice/True False Questions