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AssignmentMultiple Select

Monetary Policy: The Federal Reserve

Question 1 • IL-Economics

Identify the goals of the central bank when creating monetary policy. Check all that apply.reducing employmentinfluencing the business cyclereducing economic growthencouraging economic growthavoiding periods of time where little credit is available

Answer
A
reducing employment
B
influencing the business cycle
C
reducing economic growth
D
encouraging economic growth
E
avoiding periods of time where little credit is available

Explanation

A central bank uses monetary policy to influence the business cycle and support steady economic activity. It may encourage economic growth by adjusting interest rates and the availability of money and credit. It also aims to prevent credit from becoming so scarce that households and businesses cannot borrow; reducing employment or economic growth is not a goal.

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