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 31, 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

The accompanying graph shows the short-run demand and cost situation for a price searcher in a market with low barriers to entry. Price (dollars) 24 8 MC ATC MR 30 D 45 50 Quantity/time The firm will maximize its profit at a quantity of units. After choosing the profit maximizing quantity, the firm will charge a price of The firm will receive $ in revenue at the profit-maximizing quantity. The total cost of production for this profit-maximizing quantity is S The maximum profit the firm can earn in this situation is $ per unit for this output. How will the situation change over time? Profits will attract rival firms into the market until the profit-maximizing price falls to the level of per-unit cost. ◇ Losses will induce firms to leave this market until the profit maximizing price falls to zero. The market will adjust until the price charged by this firm no longer exceeds marginal cost at the profit-maximizing quantity. This market is already in long-run equilibrium, and will not…

Explain how are kids well being with the poverty simulation.

Explain in a page essay how people deal with poverty simulation.

Answer 2

Question

Chapter 31, 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 31, 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 31, 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 31, 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 31, 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 31, 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. 31.1 - Prob. 1RQ Ch. 31.1 - Prob. 2RQ Ch. 31.1 - Prob. 3RQ Ch. 31.1 - Prob. 4RQ Ch. 31.2 - Prob. 1RQ Ch. 31.2 - Prob. 2RQ Ch. 31.2 - Prob. 3RQ Ch. 31.3 - Prob. 1RQ Ch. 31.3 - Prob. 2RQ Ch. 31.3 - 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 31 Solutions