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an economy is producing at a level of output that is equal to the full-employment level of output. prices of a fundamental resource, such as oil, increase significantly. what would be the best monetary policy?

Answer :

The best monetary policy would be there is no obviously correct policy, unless you can specify your goals.

  • The Federal Reserve's actions and communications to advance maximum employment, stable prices, and moderate long-term interest rates—the three economic objectives that the Congress has directed the Federal Reserve to pursue—combine to form monetary policy in the United States.
  • The actions performed by a nation's central bank to manage the money supply in order to maintain economic stability are referred to as monetary policy.
  • For instance, policymakers use instruments like interest rates, reserves, bonds, etc. to manage the flow of money in order to increase employment, GDP, and price stability.

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