El-Erian: Jobs Report Makes Fed's 'Trilemma' Even Harder

The transcript discusses the current economic achievements, highlighting job creation, wage growth, and low unemployment rates. It addresses the challenges faced by the Federal Reserve, particularly the trilemma of balancing monetary policy objectives with financial stability. The service sector is identified as a key driver of growth, which complicates the Fed's task due to its insensitivity to interest rates. The Fed faces a dilemma between targeting inflation with high interest rates, risking financial stability, or tolerating higher inflation. The unpredictability of the Fed's decisions is also noted.

Which of the following is NOT mentioned as a positive economic indicator in the first section?

• Labor participation

• Wage growth

• Job creation

• High inflation

What is identified as the current engine of growth in the economy?

• Technology sector

• Agricultural sector

• Service sector

• Manufacturing sector

What challenge does the Fed face with the service sector's growth?

• It is less sensitive to interest rates

• It is highly sensitive to interest rates

• It is declining rapidly

• It is unaffected by inflation

What are the two choices the Fed has in dealing with inflation according to the final section?

• Cut interest rates or increase spending

• Increase exports or decrease imports

• Raise interest rates or tolerate higher inflation

• Increase taxes or reduce spending

Why is the Fed's decision-making process considered unpredictable?

• They have not been consistent over time

• They frequently change their objectives

• They have been consistent over time

• They always follow a fixed pattern