to accept a semi-standard economy. They call this tradeoff the Phillips Curve. The Phillips Curve is thought to be the proper way of balancing economic growth and inflation. For this reason the Federal Reserve is always looking for the perfect equilibrium at which we can maximize our economic growth while keeping inflation as minimal as possible. They do this by increasing and decreasing interest rates. Although, Economists and the Federal Reserve abide by the Phillips Curve as a general rule for not letting inflation get out of hand, it has been proven many times in the past that it is possible to have a very healthy and prosperous economy without raising inflation at all. I have concluded that inflation is definitely an unwanted and usually unneeded aspect of a good economy. The main concept of the Phillips Curve is fine; it just needs to be updated. They need to reevaluate the weight of the prices for the different goods. They also need to update the overall list of important goods in the typical budget. This new listing would have to include all the latest goods that were not as important in the past. The Phillips Curve should also start taking into consideration the ratio of the quality that the good has increased to the price that it has increased. This would show a truer relation of the prices of goods to the inflation of the economy. I can see the Federal Reserves reasoning behind raising interest rates to slow down the economy and lower inflation, but they need to realize that the rate of inflation is not completely dependant upon the rise and fall of the economies well being. The past has proven to us numerous times that the economy is quite capable of being stable and prosperous without affecting the inflation rate in a negative way. Thats why I feel that it would be in the nations best interest to continue letting the economy expand into bigger and better things without raising interest rates to unneeded proportions. The Ph...
