If the Federal Reserve does not raise interest rates when prices rise too high, too fast, it could lead to an overheated economy. This means that the economy could experience a period of rapid inflation, where the prices of goods and services increase at a rate that is unsustainable. This could potentially lead to a bubble, where asset prices are driven up to levels that are not supported by their underlying value, which could then burst and lead to a recession. Additionally, if inflation is allowed to run rampant, it could erode the purchasing power of consumers and lead to a decrease in economic activity.
Economics can be intimidating to the person who is not well-versed in business and mathematics. This...
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