Explore BrainMass

Business Cycles, Full Employment, Inflation and the Fed

This content was STOLEN from BrainMass.com - View the original, and get the already-completed solution here!

Why does capitalism have business cycles and what is our business cycle today?. Why would you suppose that the FED and the US Government to target these two percentages? What is the percentage rate of Full Employment and Inflation that that these two organizations try to keep as its target?

© BrainMass Inc. brainmass.com October 17, 2018, 3:52 am ad1c9bdddf

Solution Preview

Business Cycles, Full Employment, Inflation and the Fed
Remember - I cannot answer the question, but I can push you in the right direction.

Some intro materials: (I only cite people who are generally taken seriously)

A business cycle is the "boom and bust" of all capitalist economies. The basic concept is that during a boom period, people save less, rates go down, borrowing gets more riskier and more people are hired, increasing demand. All of these things leads to a bust, because, eventually, the money for new investment will run out. If it keeps being created, it will eventually lead to inflation.
Inflation results when more money is being created without an corresponding increase in production. A perfect monetary policy would print as much money as would exactly match the amount of production in a society.

The Fed and the government target inflation and unemployment because they often work against each other. If they are balanced, then the monetary policy is a success. A rise in consumer ...

Solution Summary

References are given regarding the topics: Business Cycles, Full Employment, Inflation and the Fed.

Similar Posting

Monetary policy helps to sustain economic growth

A question that arises in training is, "How does monetary policy help sustain growth and help the ups and downs of the business cycle?" Given the key role of monetary policy and knowing this question will continue to arise, you decide to add a section about this topic.

Discuss how monetary policy helps to sustain economic growth and smooths out the swings in the business cycle.

Analyze the ways in which monetary policy can influence a nation's economic goals of achieving full employment, controlling inflation, sustaining adequate economic growth, and achieving a stable balance-of-payments position.

View Full Posting Details