Homework Help

What should the U.S. Congress and the Federal Reserve do about the current...

user profile pic

cbuteaux | eNoter

Posted April 12, 2011 at 10:47 AM via web

dislike 1 like
What should the U.S. Congress and the Federal Reserve do about the current macroeconomic situation, i.e. inflation/recession?

What should the U.S. Congress and the Federal Reserve do about the current macroeconomic situation, i.e. inflation/recession?

Tagged with discussion, economics

2 Answers | Add Yours

user profile pic

pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted April 12, 2011 at 10:58 AM (Answer #2)

dislike 0 like

First of all, we are not in a recession right now.  We are in a recovery, albeit a slow one.  Second, inflation is not particularly high right now.  If you look at the "fintrend" link below, you will see that inflation today is not high compared to most other times in the past decade.

As to what Congress should do, it is not clear.  Macroeconomics is not a precise science and no one can be sure what impact various actions will have.  Many people think that what Congress really needs to do is to reduce government spending and the deficit.  Conservatives, in particular, believe that this would lead to an increase in aggregate supply.  This would happen as people became more confident in the direction of the country and the economy.  An increase in aggregate supply would increase GDP and reduce the price level.  This would be perfect for making sure we don't go into a recession or have inflation.

user profile pic

litteacher8 | Middle School Teacher | (Level 1) Distinguished Educator

Posted June 23, 2011 at 11:49 PM (Answer #3)

dislike 0 like
One of the biggest drivers of the economy is the middle class. Right now, the middle class is being creamed by the housing market. Unemployment, underemployment and underwater house values are serious concerns. When the middle class does not have money, the economy slows. Yes, there are other factors involved here. The housing market crash killed the credit markets, and that affects everyone. What should Congress do to help the economy? Stop and reverse the foreclosure crisis, unfreeze the credit markets, and get the middle class back to work.

Join to answer this question

Join a community of thousands of dedicated teachers and students.

Join eNotes