Cat Potts, Chapter 10, question 7

The Federal Reserve is far more involved in the economic world than I had previously thought. Going into this chapter, I imagined the Federal Reserve as more of the "master bank" than actually being in charge of managing inflation and other important factors. In a sense, it is a sort of master bank, but not in the way that most commonly would presume. Another part of this chapter that was new to me was the importance of balance, and how there can certainly be too much of a good thing. For example, extreme inflation can be incredibly dangerous for the economy. Generally speaking, inflation is a positive factor, as it represents economic growth. However, in a situation such as the 1970's, as Wheelan mentioned, too much inflation must be balanced out so as to not result in an economic disaster, which is where the Federal Reserve comes in to play. The Federal Reserve keeps our economy from falling apart.