The fundamental objective of monetary policy is to assist the economy in achieving:
A)a rapid pace of economic growth.
B)a money supply which is based on the gold standard.
C)a full-employment, noninflationary level of total output.
D)a balanced-budget consistent with full-employment.

Question

Quizplus · Accepted Answer

The primary goal of monetary policy is to achieve a full-employment, noninflationary level of total output. This means helping the economy to operate at its maximum potential without generating high inflation rates that could be harmful to both consumers and investors. Monetary policy can be used to stimulate economic growth, but only within the context of maintaining price stability. The gold standard is no longer used as a basis for determining the money supply in most countries, and a balanced-budget is a fiscal policy goal rather than a monetary policy objective.

The Fundamental Objective of Monetary Policy Is to Assist the Economy