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Monetary policy consists of changes in the money supply and interest rates by the Fed in order to meet certain macroeconomic goals such as maximum employment and stable prices.

A. True
B. False

Answer :

The correct option is (option a) True. Monetary policy consists of changes in the money supply and interest rates by the Fed in order to meet certain macroeconomic goals such as maximum employment and stable prices.

  • Monetary policy refers to the actions undertaken by a nation's central bank, such as the Federal Reserve (the Fed) in the United States, to control the money supply and influence interest rates with the aim of promoting economic growth and stability.
  • The primary objectives of the Fed's monetary policy are to achieve maximum employment and stable prices, which, alongside ensuring moderate long-term interest rates, make up its dual mandate.
  • The Fed utilizes several tools to conduct monetary policy, including the discount rate, reserve requirements, and open market operations. These tools help regulate the amount of money available to banks, credit unions, and savings and loans, thereby affecting overall economic activity, including employment levels and price stability.

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