Which goals of the fed frequently conflict?

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Which goals of the fed frequently conflict?



Answer: The goal of price stability often conflicts with the goal of high econmic growth and employment and interest rate stability. When the economy is expanding along with employment, inflation may rise. In order to pursue the goal of price stability the fed may have to pursue contractionary anti-inflationary policy that conflicts with the goal of high employment and economic growth. Similarly when the central bank wants to pursue tight monetary policy and raise interest rates in order to contain inflation, this pursuit of the goal of price stability may conflict with the goal of interest rate stability.

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