ECONOMICS
MONETARY POLICY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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a rapid pace of economic growth
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a money supply which is based on the gold standard
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full employment, noninflationary level of total output
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a balanced budget consistent with full employment
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Detailed explanation-1: -The fundamental objective of monetary policy is to aid the economy in achieving full-employment output with stable prices.
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: -The Chakravarty committee has emphasized that price stability, growth, equity, social justice, promoting and nurturing the new monetary and financial institutions have been important objectives of the monetary policy in India.
Detailed explanation-4: -Monetary policies can influence the level of unemployment in the economy. For example, an expansionary monetary policy generally decreases unemployment because the higher money supply stimulates business activities that lead to the expansion of the job market.