The Federal Reserve plays a crucial role in controlling inflation and deflation in the economy. It does this by regulating the interest rates of borrowed money, which in turn alters the amount of capital that flows throughout the economy. When the economy needs stimulation, the Fed lowers interest rates, making it cheaper for corporations to borrow money for investment purposes. Conversely, when prices rise too high, too fast, the Fed raises interest rates to discourage borrowing and slow the rising inflation costs.
Economics can be intimidating to the person who is not well-versed in business and mathematics. This...
View summary