Economics Essay, Research Paper
· Explain why the problem or topic written about in the article is important in the study of economics.
This article is important to the study of economics because economics deals with the management of the income, supplies, and expenses of a household, community, government, or other group or organizations. And if management of these things are not regulated inflation will occur or it will not be able to support itself and might fall into a depression.
1. What is the problem?
· One problem is that the economy has been rapidly rising, and if it rises too much the economy might not be able to back itself up and we might fall into another depression.
· Another problem is that if the economy continues to rise inflation will occur and the prices of our goods and services will increase.
2. How does this problem affect our economy or the economy of other nations?
· If our economy falls and we get into a depression people wont be able to support their family financially and have money to support their assets.
· If inflation occurs and the prices of our goods and services increase, some people will not be able to afford these products or services. Also, if inflation occurs, buyers for our products and services from other countries will not be able to afford our prices, therefore trade with these countries will decrease.
3. What is being done to deal with this problem?
· The Federal Reserve tightened up its campaign to cool down the economy with a larger than usual interest rate. Not bothered by some early signs of inflation officials raised short-term rates by half of a percentage point. The five previous increases since June had been just a fourth of a point.
· Federal Reserve officials have stressed repeatedly in recent weeks that they consider the economy to be in a time of surprise and uncertainly based on incoming data, so in order to tame the economy they have to raise interest rates so inflation will not occur.
The Wall Street Journal
May 17, 2000
Fed Boosts Rates by One-Half Point, Warns That the economy Isn t Slowing
Jacob H. Schlesinger
A2 & A6