Question

Which of the following is not one of the monetary policy goals of the Federal Reserve​ ("the Fed")?

Answer 1

Answer:

C. price stability

Explanation:

The Fed fosters price stability by regulating inflation in the economy. By attaining price stability, the Fed achieves its objectives of maximum sustainable growth and low level of unemployment. The Fed uses monetary tools such as the fed fund rate and the discount rate to control inflation and by extension prices.

A high rate of inflation implies the prices of goods and services is rising.  At inflation, the purchasing power of a currency is eroded. The aggregate demand, therefore, decreases, which results in production cuts. The Fed controls inflation to maintain a stable currency value. Unstable prices bring uncertainty in the markets. Producers may hold back due to the high risk involved in producing with fluctuating prices.