As you are reading the economic news today, you come across the following headline: "Consumer Confidence Slumps as Home Prices Decline for Sixth Straight Month". The article is discussing how households feel less wealthy as a result of a decline in home prices. Because roughly 50% of household wealth is the value of their home, a sudden decrease in the price they can potentially sell their home for if they needed to makes them suddenly less wealthy. As a result, households are spending far less of their incomes. As an additional problem, uncertainty about how much more home prices might go down has lead to a decrease in people buying new homes (remember that new home purchases are included in GDP, but not in the "C" component of the GDP formula). You go out and collect the following information: Macroecono Indicator Value of the indicator Source of the Indicator Current output $14.42 Trillion Congressional Budget Office ("CBO") Est. full employment output $16 Trillion CBO Current rate of unemployment 9.9% Bureau of Labor Statistics ("BLS") Est. natural rate of unemp. 5.5% CBO Current inflation rate -0.1% BLS Target rate of inflation 2% Federal Reserve Current Fed Funds rate 2.1% Federal Reserve Current MPC 0.95 CBO Current Reserve Requirement 25% Federal Reserve Your congressman is concerned about the current state of the economy. Your job is to prepare a Policy Memo to fully brief your congressman about the current state of the economy. Your Policy Memo should