Explain the given statement and identify why the primary goal of Fed is price stability.

Question

Want to see more full solutions like this?

Answer 1

Question

Chapter 14, Problem 1SPA

To determine

Explain the given statement and identify why the primary goal of Fed is price stability.

Expert Solution & Answer

Explanation of Solution

The monetary policies of the Fed always are set to achieve its basic primary goals of maximum employment, stable prices, and moderate long-term interest rates, in which, the price stability is treated as the primary goal. The reason is that this primary goal directly meets the second goal and indirectly meets the remaining two goals of Fed. Because when an economy achieves price stability, it indicates that the inflation rate is low. A lower price level will help to maintain the long-term interest rate. On the contrary, when the price level is stable, consumers and investors will be more interested to increase the expenditure. As a result, the unemployment rate will close the natural rate of unemployment. Hence, the Fed always sets the price stability as a primary policy goal to meet its objectives.

Economics Concept Introduction

Monetary policy: The monetary policies are the policies taken by the central bank to chase its objectives such as price stability and maximum employment.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

Recent research indicates potential health benefits associated with coffee consumption, including a potential reduction in the incidence of liver disease. Simultaneously, new technology is being applied to coffee bean harvesting, leading to cost reductions in coffee production. How will these developmentsaffect the demand and supply of coffee? How will the equilibrium price and quantity of coffee change? Use both words and graphs to explain.

► What are the 95% confidence intervals for the intercept and slope in this regression of college grade point average (GPA) on high school GPA? colGPA = 1.39 + .412 hsGPA (.33) (.094)

Answer 2

Question

Chapter 14, Problem 1SPA

To determine

Explain the given statement and identify why the primary goal of Fed is price stability.

Expert Solution & Answer

Explanation of Solution

The monetary policies of the Fed always are set to achieve its basic primary goals of maximum employment, stable prices, and moderate long-term interest rates, in which, the price stability is treated as the primary goal. The reason is that this primary goal directly meets the second goal and indirectly meets the remaining two goals of Fed. Because when an economy achieves price stability, it indicates that the inflation rate is low. A lower price level will help to maintain the long-term interest rate. On the contrary, when the price level is stable, consumers and investors will be more interested to increase the expenditure. As a result, the unemployment rate will close the natural rate of unemployment. Hence, the Fed always sets the price stability as a primary policy goal to meet its objectives.

Economics Concept Introduction

Monetary policy: The monetary policies are the policies taken by the central bank to chase its objectives such as price stability and maximum employment.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 14, Problem 1SPA

To determine

Explain the given statement and identify why the primary goal of Fed is price stability.

Expert Solution & Answer

Explanation of Solution

The monetary policies of the Fed always are set to achieve its basic primary goals of maximum employment, stable prices, and moderate long-term interest rates, in which, the price stability is treated as the primary goal. The reason is that this primary goal directly meets the second goal and indirectly meets the remaining two goals of Fed. Because when an economy achieves price stability, it indicates that the inflation rate is low. A lower price level will help to maintain the long-term interest rate. On the contrary, when the price level is stable, consumers and investors will be more interested to increase the expenditure. As a result, the unemployment rate will close the natural rate of unemployment. Hence, the Fed always sets the price stability as a primary policy goal to meet its objectives.

Economics Concept Introduction

Monetary policy: The monetary policies are the policies taken by the central bank to chase its objectives such as price stability and maximum employment.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 14, Problem 1SPA

To determine

Explain the given statement and identify why the primary goal of Fed is price stability.

Expert Solution & Answer

Explanation of Solution

The monetary policies of the Fed always are set to achieve its basic primary goals of maximum employment, stable prices, and moderate long-term interest rates, in which, the price stability is treated as the primary goal. The reason is that this primary goal directly meets the second goal and indirectly meets the remaining two goals of Fed. Because when an economy achieves price stability, it indicates that the inflation rate is low. A lower price level will help to maintain the long-term interest rate. On the contrary, when the price level is stable, consumers and investors will be more interested to increase the expenditure. As a result, the unemployment rate will close the natural rate of unemployment. Hence, the Fed always sets the price stability as a primary policy goal to meet its objectives.

Economics Concept Introduction

Monetary policy: The monetary policies are the policies taken by the central bank to chase its objectives such as price stability and maximum employment.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 14, Problem 1SPA

To determine

Explain the given statement and identify why the primary goal of Fed is price stability.

Expert Solution & Answer

Explanation of Solution

The monetary policies of the Fed always are set to achieve its basic primary goals of maximum employment, stable prices, and moderate long-term interest rates, in which, the price stability is treated as the primary goal. The reason is that this primary goal directly meets the second goal and indirectly meets the remaining two goals of Fed. Because when an economy achieves price stability, it indicates that the inflation rate is low. A lower price level will help to maintain the long-term interest rate. On the contrary, when the price level is stable, consumers and investors will be more interested to increase the expenditure. As a result, the unemployment rate will close the natural rate of unemployment. Hence, the Fed always sets the price stability as a primary policy goal to meet its objectives.

Economics Concept Introduction

Monetary policy: The monetary policies are the policies taken by the central bank to chase its objectives such as price stability and maximum employment.

Answer 6

Chapter 14, Problem 1SPA

To determine

Explain the given statement and identify why the primary goal of Fed is price stability.

Expert Solution & Answer

Explanation of Solution

The monetary policies of the Fed always are set to achieve its basic primary goals of maximum employment, stable prices, and moderate long-term interest rates, in which, the price stability is treated as the primary goal. The reason is that this primary goal directly meets the second goal and indirectly meets the remaining two goals of Fed. Because when an economy achieves price stability, it indicates that the inflation rate is low. A lower price level will help to maintain the long-term interest rate. On the contrary, when the price level is stable, consumers and investors will be more interested to increase the expenditure. As a result, the unemployment rate will close the natural rate of unemployment. Hence, the Fed always sets the price stability as a primary policy goal to meet its objectives.

Economics Concept Introduction

Monetary policy: The monetary policies are the policies taken by the central bank to chase its objectives such as price stability and maximum employment.

Answer 7

Chapter 14, Problem 1SPA

To determine

Explain the given statement and identify why the primary goal of Fed is price stability.

Answer 8

Expert Solution & Answer

Explanation of Solution

The monetary policies of the Fed always are set to achieve its basic primary goals of maximum employment, stable prices, and moderate long-term interest rates, in which, the price stability is treated as the primary goal. The reason is that this primary goal directly meets the second goal and indirectly meets the remaining two goals of Fed. Because when an economy achieves price stability, it indicates that the inflation rate is low. A lower price level will help to maintain the long-term interest rate. On the contrary, when the price level is stable, consumers and investors will be more interested to increase the expenditure. As a result, the unemployment rate will close the natural rate of unemployment. Hence, the Fed always sets the price stability as a primary policy goal to meet its objectives.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Economics Concept Introduction

Monetary policy: The monetary policies are the policies taken by the central bank to chase its objectives such as price stability and maximum employment.

Answer 12

Ch. 14.1 - Prob. 1RQ Ch. 14.1 - Prob. 2RQ Ch. 14.1 - Prob. 3RQ Ch. 14.1 - Prob. 4RQ Ch. 14.2 - Prob. 1RQ Ch. 14.2 - Prob. 2RQ Ch. 14.2 - Prob. 3RQ Ch. 14.3 - Prob. 1RQ Ch. 14.3 - Prob. 2RQ Ch. 14.3 - Prob. 3RQ

Explain the given statement and identify why the primary goal of Fed is price stability.

Explain the given statement and identify why the primary goal of Fed is price stability.

Explanation of Solution

Want to see more full solutions like this?

Chapter 14 Solutions