Some economists object to having the Fed concentrate solely on price stability because it would
A) free the Fed from political pressure.
B) lessen its credibility.
C) make stabilizing the economy more difficult.
D) privatize the Federal Reserve.

Question

Quizplus · Accepted Answer

Having the Fed only focus on price stability would limit their ability to use monetary policy to stabilize the economy during times of recession or inflation. A narrower focus would make it more difficult for the Fed to respond to economic shocks and maintain full employment.

Some Economists Object to Having the Fed Concentrate Solely on Price