business statist In the summer of 2015, many economists and policymakers expecte

Question

business statist In the summer of 2015, many economists and policymakers expected that the Federal Reserve would increase is target for the federal funds rate by the end of the year. Some economists argued, though, that it would be better for the Fed to leave its target unchanged At the time, the unemployment rate was 5 3 percent, close to full employment, but the inflation rate was below the Fed's target of 2 percent stan t RQ Source: Min Zeng,"Inflation Expectations Fall, Making Rate Hike More Difficult to Justify." Wall Street Jounal, August 6, 2015 If it did not increase its target for the federal funds rate, the policy goal the Fed would be promoting is O A. O B. stabiliy of financial markets and institutions, because maintaining lower interest rates would provide stability to zero unemployment, because maintaining lower interest rates would stimulate the economy and increase employment financial markets economic growth, because maintaining lower interest rates would stimulate the economy and raise the price level price stability, because maintaining lower interest rates would stimulate the economy and lower the price level -side econom C, O D' S

Explanation / Answer

Ans: B. Stability of financial markets and institutions, because maintaining lower interest rates would provide stability to financial markets. It also helps in economy's long term performance.

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