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    Goals of US monetary policy and their consistency

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    Two goals of monetary policy in the United States are price stability and full employment? Are these goals always consistent with each other? Explain with the help of the appropriate graphs.

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    Usually these two goals conflict each other, because there is a negative relationship between the price level and the unemployment rate. As the unemployment rate falls in response to the economy moving closer to capacity, the price level rises more quickly. Shown by Phillips Curve .

    In the long run the AS curve is vertical, and so is the Phillips curve. In the long run the Phillips curve corresponds to the natural rate of unemployment - unemployment that is consistent with the ...

    Solution Summary

    Goals of US monetary policy and their consistency are listed.