Wall Street Journal Assignment #1
Unemployment and inflation have an inverse relationship meaning that as one increases, the other decreases. According to the textbook, an ideal situation for the Federal Reserve would be to achieve both a low level of unemployment and a low level of inflation. After the 9/11 attacks in New York, the United States was put in a tragic financial crisis that led to the recession in 2008.
While the debate for the causes of the 2008 recession continue to develop, most focus on the role that the public monetary policy and the practices of private financial institutions played on the financial crisis in the United States. Some economists claim that the origin of the crisis can be …show more content…
During the past few years, interest rates have been historically low because the Fed has attempted to stimulate the economy by suppressing the interest rates. However, currently the chances of increasing heavily outweigh the chances of interest rates decreasing.
All of the above is not to say that inflation is not an issue currently in the United States. Rising inflation is the major cause of the ongoing increase in interest rates. In the United States, inflation affects the employees must stronger but as an entire nation, the US is affected more so by unemployment. Both are ongoing issues that the Federal Reserve continues to battle in the hopes of ending the financial crisis and pushing the US economy in the right direction.
Works Cited 1. Greider, William. "Can the Federal Reserve Help Prevent a Second
Recession?"TheNation.com. The Nation, 26 Nov. 2012. Web. 9 Mar. 2013. <http://www.thenation.com/article/171126/can-federal-reserve-help-prevent-second-recession#>. 2. Madura, Jeff. Financial Markets and Institutions. 10th ed. N.p.: Florida Atlantic
University, 2008. Print. 3. Murray, Sara. "Obstacle to Deficit Cutting: A Nation on Entitlements." Online.wsj.com.
Wall Street Journal, 14 Sept. 2010. Web. 8 Mar. 2013. <http://online.wsj.com/article/SB10001424052748703791804575439732358241708.html?KEYWORDS=recession+2008+united+states>. 4. Perry, Joellen,