ECONOMICS
INFLATION
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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to promote high employment.
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to accommodate demands of workers for higher wages.
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to finance a persistent budget deficit.
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for all the above reasons.
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Detailed explanation-1: -to accommodate demands of workers for higher wages.
Detailed explanation-2: -Aggregate Demand As businesses increase their prices more rapidly in response to higher demand, this leads to higher inflation.
Detailed explanation-3: -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.
Detailed explanation-4: -Inflation Targeting If prices rise faster than their target, central banks tighten monetary policy by increasing interest rates or other hawkish policies. Higher interest rates make borrowing more expensive, curtailing both consumption and investment, both of which rely heavily on credit.
Detailed explanation-5: -The Fed has traditionally used three tools to conduct monetary policy: reserve requirements, the discount rate, and open market operations. In 2008, the Fed added paying interest on reserve balances held at Reserve Banks to its monetary policy toolkit.