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The Federal Reserve is the central bank of the United States. It consists of seven members whose job it is to conduct monetary policy in such a fashion that it meets three goals

  ➀ Maximum sustainable employment
  ➁ Stable prices
  ➂ Moderate long-term interest rates.

These goals are commonly referred to as the Federal Reserve’s mandate

  • By accomplishing the above three objectives, the Fed manages to influence the business cycle in such a way that periods of expansion are prolonged and periods of recession lessened. 
  • Dual mandate - the Fed's policy of stable prices and sustainable employment
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