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What Are the Fed's Ultimate Targets? Explain How the Fed

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Essay

What are the Fed's ultimate targets? Explain how the Fed achieves ultimate economic targets using its available tools.


Definitions:

Efficient Allocation

The distribution of resources in such a manner that it's impossible to improve anyone's condition without worsening someone else's.

Risk Diversified

The strategy of spreading investments across various assets to reduce exposure to risk in any single area.

Expected Income

The amount of income an individual anticipates or forecasts to receive over a certain period.

Probability

A numeric evaluation representing the probability of an event taking place, where 0 signifies no chance and 1 signifies certainty.

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