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If inflation begins to become a problem should the federal reserve raise interest rates even if unemployment is not at an acceptable level?
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Interest rates inflation the federal deficit and unemployment levels are all elements in which aspect of macroenvironment?
Interest rates, inflation, the federal deficit, and unemployment levels, are all elements of the economic macroenvironment. Another way of saying macro is large scale.
Is the Federal Reserve responsible for determining the inflation rate and the unemployment rate?
The Federal Reserve does not set the inflation or unemployment rates. These rates are naturally fluctuating based on market activities. Typically, as inflation rises, unemployment decreases and vice versa (except in the case of stagflation in 1970's). The Federal Reserve DOES, however, adjust interest rates and various other rates to control the money supply in order to combat unemployment and inflation. See the "Money Supply Theory."
How does government intervene to lower inflation or unemployment?
The government acts on inflation through The Federal Reserve. The Federal Reserve acts on inflation by targeting interest rates through the reserve requirement. When interest rates are high, people want to keep money in their bank accounts, and inflation decreases. When interest rates are low, people are more willing to spend their money and inflation increases. Once, the Federal Reserve actually pushed the United States into a recession once to battle especially high inflation. Ever since then, it has been very important for the Federal Reserve to keep inflation in check. The government, as demonstrated during the latest recession, enacts many different stimulus packages to help the economy recover and help unemployment come down from extremely high percentages.
What effect did fords economic policy have fallen n the economy?
Inflation went down due to spending cuts, but unemployment remained high under Ford's economic policy.
During Carter's administation how did the government try to fight inflation?
The Federal Reserve began raising interest rates
What would most likely if the federal reserve system lowered interest rate?
Unemployment would be reduced in the short run.
To curb inflation in the late 1970's the Federal Reserve system forced interest rates upwards This is an example of?
Monetary policy
In late 1970 the federal reserve system forced interest rates upwards to curb inflation is an example of?
it's monetary policy
What agency sets the interest rate on loans?
The agency responsible for setting interest rates on loans is the Federal Reserve Board. The interest rate on loans is tied into the rate of inflation and the GNP or Gross National Product.
What would most likely happen if the federal reserve system lowered interest rates?
Unemployment would be reduced in the short run.
Was the American economy good in the 1990s?
The 1990s was the longest period of economic expansion in the history of the United States. The stock market boomed, unemployment was low, millions of new jobs were created, wage growth was healthy, inflation and interest rates were low, and the Federal government actually ran a surplus for three years.
Which government board affects our nation's economy?
The Federal government board affects our nations economy. They can regulate the intrest rates, taxes, and buy and sell bonds to prevent either inflation or unemployment.
