Sample Essay

According to Rubin, the increase interest rate was caused by a series of factors. It all initiated with the doubling of the crude oil prices that resulted to inflation as reflected by the consumer index between 2004 and 2006. This forced the federal government to increase the federal rates that were reflected on the bank rates.However, the economists do not agree with Rubin argument. Rubin represents stagflation in the fact that there was an increased inflation as reflected by the consumer price index. Since economics has proved that persistent reflection results to unemployment, then the result was stagflation since there was no macroeconomic policy that could address this problem. According to Rubin, consumer price index soared due the doubling of the prices of the oil barrel in West Texas resulted to energy inflation. Taking into consideration that among the components of consumer price index is energy, then energy inflation resulted to soaring of the consumer price index (Rubin).

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