Federal Reserve Board Chairman Alan Greenspan vows to promote “low and stable inflation.” The main goal of the U.S. economy is to maintain price stability. This reduces the likelihood that imbalances could develop that would ultimately undermine the record economic expansion that the U.S. is currently having. The United States has two basic goals for its economy: to promote maximum output and employment and to promote stable prices. In the long run, the …showed first 75 words of 368 total…

…showed last 75 words of 368 total…employment in the long run, it can affect them in the short run. For example, when demand occurs and there is a recession, the Fed can stimulate the economy and help push it back toward its long run level of output by lowering interest rates. Therefore, in the short run, the Feds are concerned with stabilizing the economy. That is, smoothing out the peaks and valleys in output and employment around their long-run growth paths.