What is the main function of monetary policy?.

1 answer:

8 0

The goals of monetary policy are to regulate economic volatility and achieve price stability (low and steady inflation).

What is the monetary policy?

A country's central bank uses a set of instruments called monetary policy to regulate the total amount of money in circulation, foster economic expansion, and implement measures like adjusting interest rates and altering bank reserve requirements.

The Federal Reserve Bank of the United States carries out monetary policy under a twin mandate to maximize employment while containing inflation.

Targeting a high degree of inflation and lowering the amount of money in circulation are the goals of contractionary monetary policy.

Because a larger money supply and alluring interest rates encourage business activity and job market expansion, an expansionary monetary policy reduces unemployment. Monetary policy has the potential to impact the rates at which local and foreign currencies are exchanged.

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