ECONOMICS
FEDERAL RESERVE
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
Create a high level of inflation
|
|
|
Create price stability in the economy
|
|
|
Print currency for American citizens
|
|
|
Develop fiscal policy for the United States
|
Detailed explanation-1: -As previously stated, the main goal of monetary policy is to maintain price stability and a stable level of employment.
Detailed explanation-2: -It is the Federal Reserve’s actions, as a central bank, to achieve three goals specified by Congress: maximum employment, stable prices, and moderate long-term interest rates in the United States (figure 3.1).
Detailed explanation-3: -It is responsible for managing monetary policy and regulating the financial system. It does this by setting interest rates, influencing the supply of money in the economy, and, in recent years, making trillions of dollars in asset purchases to boost financial markets.
Detailed explanation-4: -Central banks use monetary policy to manage economic fluctuations and achieve price stability, which means that inflation is low and stable. Central banks in many advanced economies set explicit inflation targets. Many developing countries also are moving to inflation targeting.