The Story of Inflation and Expectations

The Fed is basically in charge of how much it costs to borrow. When you increase the amount that you have to pay to borrow money, people do less of that. And so they do less hiring and buy less stuff with borrowed money. In processions are also usually deflationary periods. It goes down because paul volker is specifically targeting the amount of money out there. He tries to control the rate of growthand make sure it grows more slowly.

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