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The major objectives of monetary policy is/are:
Increase in output and employment
Stability in the foreign exchange rate
Price stability
All of these
- Increase in output and employment: Monetary policy often aims to boost economic growth and reduce unemployment by adjusting interest rates and influencing the money supply. This can encourage spending and investment, stimulating the economy.
- Stability in the foreign exchange rate: Central banks may use monetary policy tools to prevent excessive fluctuations in the currency exchange rates, which can impact international trade and economic stability.
- Price stability: Controlling inflation is a key goal. By managing the money supply, central banks strive to avoid hyperinflation or deflation, maintaining stable prices to ensure economic confidence.
- All of these: The comprehensive goal of monetary policy often includes promoting economic growth, maintaining currency stability, and ensuring price stability.
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