The Challenge Ahead The combination that we face of slowing economic growth and rising inflation requires walking a tightrope to face. Traditional economics tells us that as an economy enters into a slowdown, monetary policy should be easing restrictions to soften the blow of the downturn. Traditional economics also gives us the Philips Curve, which states that in the short term, unemployment rises as inflation falls. This is important because a consequence of bringing inflation down is unemployment. Hopefully by now you can see the issue the Federal Reserve faces.
Is It Possible to Avoid a Recession?
Is It Possible to Avoid a Recession?
Is It Possible to Avoid a Recession?
The Challenge Ahead The combination that we face of slowing economic growth and rising inflation requires walking a tightrope to face. Traditional economics tells us that as an economy enters into a slowdown, monetary policy should be easing restrictions to soften the blow of the downturn. Traditional economics also gives us the Philips Curve, which states that in the short term, unemployment rises as inflation falls. This is important because a consequence of bringing inflation down is unemployment. Hopefully by now you can see the issue the Federal Reserve faces.