Mal Practice?

The Federal Open Market Committee (FOMC) should keep the federal funds rate at 3 percent.

While it is likely cuts in the federal funds rate may encourage growth in GDP from the lackadaisical rate of 2.2% in 2007, it is not certain. A rate cut would spur a brief growth period in the short run where wages are relatively sticky and the aggregate supply curve is flat, but there would then be a trade off. Doing so could raise inflationary expectations and store up problems for the future. Abruptly increasing the money supply just to stimulate a temporary economic boom is typically not advised, due to the fact that eliminating the increased inflationary expectations will be nearly impossible without producing a recession. This goes against the goals of the fed to foster “price stability” and “maximum employment” (Blinder, 1997). I say typically a bad idea because there are periods when the economy is hit by some unexpected external shock (subprime mortgage......

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Title: Mal Practice
Approximate Word Count: 752
Approximate Pages: 4 (250 words per double-spaced page)

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