As central banks conduct monetary policy, they inevitably affect only _______, with no lasting impact on _______ in the long run.
A) prices; employment
B) employment; prices
C) output; prices
D) demand; employment

Question

Quizplus · Accepted Answer

Central banks primarily use monetary policy to control inflation and maintain price stability. Therefore, their actions mainly affect prices in the economy. While changes in interest rates and other monetary policy tools can impact employment levels in the short term, in the long run, employment is primarily determined by structural factors such as demographic trends, technological innovations, and government policies, which are outside the scope of monetary policy.

As Central Banks Conduct Monetary Policy, They Inevitably Affect Only