By raising and lowering interest rates, the Fed can control unemployment. They even go as far as keeping millions of Americans out of work in order to stem off inflation. This tactic is also used to keep downward pressure on wages. If too many Americans have jobs, there will be too much pressure on employers to raise wages and offer more benefits. If they didn't then their employees would most likely just find work elsewhere if they didn't feel as though they were being fairly compensated. To date, no economist has been able to come up with another way to stem the tide of inflation. But does that make it right? When interest rates are higher, there's less economic activity, no one buys cars or houses and businesses hire less. But the jobs are low wage jobs, so it's not the doctors, lawyers, and CEO's who are getting hurt, it's the janitors, dish washers, cashiers, etc. who feel the squeeze. Any thoughts
2007-09-18
08:00:56
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8 answers
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asked by
It's Your World, Change It
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Other - Politics & Government