Central banks, as they conduct monetary policy, inevitably affect only ___________, with no lasting impact on ___________ in the long run.

Question

Quizplus · Accepted Answer

Central banks primarily use monetary policy tools such as interest rates to influence prices, i.e. the rate of inflation, in an economy. However, their impact on employment is seen as secondary, and any changes they make to interest rates may take time to affect employment levels in a significant way. Therefore, while central banks can impact prices in the short and medium term, their impact on employment is less direct and more difficult to predict.

Central Banks, as They Conduct Monetary Policy, Inevitably Affect Only