ECON 1012 Lecture Notes - Lecture 2: Loanable Funds, United States Dollar, Federal Funds Rate
Document Summary
Describe the objectives of u. s. monetary policy and the framework for setting and achieving them. Explain how the federal reserve makes its interest rate decision and achieves its interest rate target. Explain the transmission channels through which the federal reserve influences real. A nation"s monetary policy objectives and the framework setting and achieving those objectives stem from the relationship between the central bank and the government. The objective of u. s. monetary policy are set out in the mandate of the board of. The goals are maximum employment, stable prices, and moderate long-term interest rates. Achieving the goal of maximum employment means attaining the maximum sustainable growth rate of potential gdp and keeping real gdp close to potential gdp: also means keeping the unemployment rate close to the natural unemployment rate. Achieving the goal of stable prices means keeping the inflation rate low (and perhaps close to zero)
