Question

When economists and policymakers refer to the​ Fed's dual​ mandate, they are referring to:

A. price stability and maximum employment.
B. price stability and moderate​ long-term interest rates.
C. price and exchange rate stability.
D. moderate​ long-term interest rates and maximum employment.

Answer 1

A) price stability and maximum employment.

Step-by-step explanation:

When Congress enacted the Federal Reserve Act in 1913, they stated the FED's mandates:

1. promote maximum employment
2. promote stable price

The FED's main objective is to conduct monetary policy in order to stabilize the economy and promote economic growth.

By stabilizing the economy the FED will lower inflation rate, therefore stabilizing prices. When the FED promotes economic growth, the unemployment rate should decrease, hopefully reaching a full employment.