What are the goals of monetary policy?

What are the main goals of monetary policy?

The main goals of monetary policy typically include controlling inflation, managing employment levels, and stabilizing the currency.

How does controlling inflation benefit the economy?

Controlling inflation helps maintain purchasing power, encourages savings, and creates a stable environment for investment.

What tools do central banks use to achieve these goals?

Central banks use tools like interest rate adjustments, open market operations, and reserve requirements to influence the economy.

Can you explain how interest rates affect economic growth?

Lowering interest rates can stimulate borrowing and spending, which boosts economic growth, while higher rates can slow it down.