Which of the following statements best describes the Federal Reserve's dual mandate.A stable financial system and stable inflation at 2%.B Maximum employment and 0% inflationC Maximum employment and long-run inflation at 2%D Full employment, 4% unemployment rate, and low, stable inflation

The Federal Reserve System is the United States of America's central banking system.It was in turn…

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Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter28: Monetary Policy And Bank Regulation

Section: Chapter Questions

Problem 35CTQ: A well-known economic model called the Phillips Curve (discussed in The Keynesian Perspective...

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Concept explainers

Inflation and Purchasing Power Theory

In economic terms, Inflation refers to the increase in the costs of various commodities which are used in daily lifestyle like food, clothes, transport, etc. over a specific time. It may lead to a fall in the purchasing power of the people and also affects the exchange rate of the currency because of the price increase. As the purchasing power falls the unit of the currency in the economy falls. When the prices of the commodities are decreased, then the purchasing power of the consumers will rise, then it will lead to deflation and changes the currency of the base economy to that of the foreign economy which will lead to change in exchange rates.

Question

Which of the following statements best describes the Federal Reserve's dual mandate.

A		stable financial system and stable inflation at 2%.
B		Maximum employment and 0% inflation
C		Maximum employment and long-run inflation at 2%
D		Full employment, 4% unemployment rate, and low, stable inflation

Definition Definition State in which an individual is without work, despite actively seeking employment opportunities. The unemployment rate refers to the percentage of the workforce that is currently unemployed. Unemployment is one of the key indicators of the conditions prevailing in an economy. It is therefore considered a barometer that points out the condition of an economy.

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