When the chairman of the Federal Reserve announced a goal of "zero inflation," which of the following economic policies was most likely being changed?
A)Fiscal policy.
B)Monetary policy.
C)Supply-side policy.

Question

Quizplus · Accepted Answer

The goal of "zero inflation" is a target of the monetary policy that the Federal Reserve controls, not fiscal or supply-side policy. Monetary policy involves managing the money supply and interest rates to achieve macroeconomic goals such as controlling inflation. The announcement indicates a shift in the Federal Reserve's monetary policy to focus more on price stability and controlling inflation.

When the Chairman of the Federal Reserve Announced a Goal