Question

Identify the goals of the central bank when creating monetary policy. Check all that apply.

1) reducing employment
2) influencing the business cycle
3) reducing economic growth
4) encouraging economic growth
5) avoiding periods of time where little credit is available

Answer 1

Monetary policy is the process by which the monetary authority of a country, like the central bank or currency board, controls the supply of money, often targeting an inflation rate or interest rate to ensure price stability and general trust in the currency.

Answer 2

Answer:

The correct answers to the question: Identify the goals of the Central Bank when creating monetary policy, would be: 2. Influencing the business cycle, 4. Encouraging economic growth and 5. Avoiding periods of time where little credit is available.

Explanation:

The purpose in creating Central Banks in countries is to have an institution that helps stabilize the internal economy of a nation and protect it from the repercussions of economic decissions from outside. As such, their role, as buffers, is not only to maintain a stable flow of money, through the issuing of coinage, but also, through the issuing of policies that enhance the creation and maintenance of businesses, but also the investement of capital into businesses. This is why the answers are 2, 4 a 5.