The Federal Reserve monetary policy goals of maximum employment means

Question

Quizplus · Accepted Answer

The Federal Reserve monetary policy goals of maximum employment means keeping the unemployment rate close to the natural unemployment rate, which is the rate of unemployment that exists when the economy is healthy and growing at its potential. This means that there is no cyclical unemployment, which is the unemployment that results from economic downturns, but some frictional and structural unemployment may be present, as these are considered part of the natural rate of unemployment. Therefore, choice (D) is the best option as it reflects the Federal Reserve's objective of maintaining full employment while allowing for some level of natural unemployment.

The Federal Reserve Monetary Policy Goals of Maximum Employment Means