This is “Monetary Policy Targets and Goals”, chapter 17 from the book Finance, Banking, and Money (v. 1.0). For details on it (including licensing), click here.

For more information on the source of this book, or why it is available for free, please see the project's home page. You can browse or download additional books there. To download a .zip file containing this book to use offline, simply click here.

Has this book helped you? Consider passing it on:
Creative Commons supports free culture from music to education. Their licenses helped make this book available to you.
DonorsChoose.org helps people like you help teachers fund their classroom projects, from art supplies to books to calculators.

Chapter 17 Monetary Policy Targets and Goals

Chapter Objectives

By the end of this chapter, students should be able to:

  1. Explain why the Fed was generally so ineffective before the late 1980s.
  2. Explain why macroeconomic volatility declined from the late 1980s until 2008.
  3. List the trade-offs that central banks face and describe how they confront them.
  4. Define monetary targeting and explain why it succeeded in some countries and failed in others.
  5. Define inflation targeting and explain its importance.
  6. Provide and use the Taylor Rule and explain its importance.