What is the primary goal of monetary policy? (2021)
Practice Questions
Q1
What is the primary goal of monetary policy? (2021)
To control inflation
To increase government spending
To reduce taxes
To promote exports
Questions & Step-by-Step Solutions
What is the primary goal of monetary policy? (2021)
Step 1: Understand what monetary policy is. It is a way for a country's central bank to control the economy.
Step 2: Learn that one of the main things monetary policy does is manage the money supply, which is the total amount of money available in the economy.
Step 3: Know that monetary policy also involves setting interest rates, which are the costs of borrowing money.
Step 4: Recognize that the primary goal of these actions is to control inflation, which is the rate at which prices for goods and services rise.
Step 5: Conclude that by controlling inflation, monetary policy helps maintain a stable economy.
