Foundations of Economics, 8th Edition

33.1 How The Fed Conducts Monetary Policy

MyEconLab Concept Video

A nation’s monetary policy objectives and the framework for setting and achieving those objectives stem from the relationship between the central bank and the government. We’ll describe the objectives of U.S. monetary policy and the framework and assignment of responsibility for achieving those objectives.

Monetary Policy Objectives

The objectives of monetary policy are ultimately political. In the United States, these objectives are set out in the mandate of the Board of Governors of the Federal Reserve System, which is defined by the Federal Reserve Act of 1913 and its subsequent amendments.

Federal Reserve Act

The Fed’s mandate was most recently clarified in an amendment ...