Question

In: Finance

How does the Fed's mandate of full[-ish] employment and price stability build inequality in the US?

How does the Fed's mandate of full[-ish] employment and price stability build inequality in the US?

Solutions

Expert Solution

When Federal Reserve is trying to maintain with full employment and price stability, then Federal Reserve is trying to increase the overall rate of employment in the economy by infusion of very high amount of liquidity and credit availability in the the overall economy and it is benefiting the business to large-scale,as it is trying to provide the business with all certain stimulation in order to increase the demand into the economy which will be trying to provide the businesses with various kinds of bailout package at the time of adverse economic crisis and it will lead to business taking very high amount of risk which will be making them more prone to default and it will also put the risk of various investors in this business is at risk.

it will also mean that the Federal Reserve is socializing the losses and privatizing the profits and it will also mean that it is working towards the capitalist economy in which it is protecting the the business people and it is also promoting inequality of income as the rich is growing more rich and the poor are growing more poor


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