Question

In​ mid-2019, an article in the Wall Street Journal quoted an investment analyst as stating that​ "heightened expectations of a​ [federal funds] rate cut may now force the Fed to act sooner than intended to avoid disappointing the market and driving up​ stocks' volatility over the​ summer." ​Source: Jessica Menton and Nathan​ Allen, "U.S. Stocks Edge​ Lower, Extending​ Losses," Wall Street Journal​, June​ 12, 2019. Is avoiding volatility part of the​ Fed's dual​ mandate?

Answer 1

Answer: B. ​No, this is not part of the​ Fed's dual mandate of price stability and high employment.

Step-by-step explanation:

For any economy to grow there needs to be price stability in the economy as it helps investors plan their future spending amongst other things. This is why the Fed has the mandate to keep prices stable.

The Fed however, does not have to maintain the stability of prices in the stock market which can be a very volatile market where the volatility is one of the very ways to make gains.