Macroeconomics Essay Example | Topics and Well Written Essays - 500 words - 1

Macroeconomics - Essay Examplend to alarmingly rise if the lump rate hits 5 or 6 percent consequently, when levels climb to double digit levels as it did in the mid/late 1970s, there was little surprise that Americans named inflation as the public confrontation number one(Hellerstein). Recently, the U.S. has experienced low and stable rates of inflation 3.4% in 2005 and 3.2% in 2006 (Jensen) this has assumption rise to speculation among policy makers about achieving zero percent inflation.Yes, I recommend the central brink to aim for zero inflation. The main reason is that zero inflation is best suited to achieve what all international monetary policy strives for supreme sustainable growth via the charge perceptual constancy conduit. This advice was put beforehand by Alan Greenspan, who had a distinguished flight as Chairman of the Federal Reserve from 1987 to 2006 he was succeeded in August 2006 by present Chairman Ben Bernanke. Greenspan repeated this advice many senten ces during his 18 year career under 4 U.S. Presidents, namely, the fundamental aim of the Fed is maximum sustainable growth over time the primary role of monetary policy in the pursuit of this goal is to foster expenditure stability. Economists deduced that Greenspan meant price stability will be achieved when economic growth is increased to the maximum with a stable price level meaning zero inflation. Greenspan confirmed their deduction during the July 1996 FOMC meeting when he said a zero inflation level would no longer alter decision making. The famous Greenspan principle maximum sustainable economic growth is accomplished at zero inflation was born (Rasche et al.).Price stability should always remain as the explicit key objective for Federal Reserve Monetary Policy. on that point are several reasons for this. Price stability encourages economic growth it reduces interest rates, stabilizes financial markets and those economic sectors abnormal by interest rates it creates an e nvironment that permits money and the