Policy & Institutions

Question 1

What are the ECB’s main objectives?

Answer 1

Price stability (target: ~2% inflation); monetary policy for eurozone

Question 2

What are the tools of monetary policy?

Answer 2

Interest rate changes (main refinancing rate), open market operations, reserve requirements.

Question 3

What is the Stability and Growth Pact?

Answer 3

EU fiscal rules: deficit ≤ 3% of GDP, debt ≤ 60% of GDP.

Question 4

Why can’t Ireland use independent monetary policy?

Answer 4

As part of the eurozone, Ireland follows ECB policy and cannot adjust interest or exchange rates independently