What Is Monetary Policy?
The ECB's main goal is price stability, aiming for 2 percent inflation over the medium term; too high and too low count as equally bad.
Video coming soon. The lesson video will appear here once it is published on YouTube.
Check yourself: sample questions
Think about each question, pick what you would answer if you like, then select “Show answer” to see the solution and why. Nothing is graded or sent to us. Example numbers are worked examples, not predictions.
1.What is the main goal of the European Central Bank's monetary policy?
The ECB's main goal is price stability, aiming for 2 percent inflation over the medium term; too high and too low count as equally bad.
2.How does the Fed's job differ from the ECB's, as described?
The Fed's mandate is maximum employment, stable prices and moderate long-term interest rates, with 2 percent inflation seen as the best fit.
3.Marge owes 10,000 at 5 percent and the loan rate rises a quarter point. What is her new yearly interest?
At 5.25 percent, 10,000 costs 525 a year, 25 more than at 5 percent (worked example).
Full course: 4 more questions for this lesson
The full course unlocks all self-check questions of all 365 lessons, the daily plan, your progress and the printable learning record. Lessons 1 to 7 are completely free.
See the full course Start the free week
Already bought? Open the course on this device
Sources (5)
- European Central Bank: Monetary policy (Introduction)
- European Central Bank: Price stability (strategy)
- Board of Governors of the Federal Reserve System: Monetary Policy - What Are Its Goals? How Does It Work?
- BIS Papers No 35: Transmission mechanisms for monetary policy in emerging market economies (2008)
- Eigene Berechnung (synthetisches Rechenbeispiel
Related lessons
Education only. Not financial advice.