Question: The European Central Bank s primary objective is price stability Policymakers
The European Central Bank’s primary objective is price stability. Policymakers interpret this objective to mean keeping inflation below, but close to, 2 percent, as measured by a euro-area consumer price index. In contrast, the FOMC has a dual objective of price stability and high economic growth. How would you expect the monetary policy reaction curves of the two central banks to differ? Why?
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