The ultimate goal of monetary policy refers to the starting point and destination of the central bank's organization and regulation of currency circulation. It reflects the objective requirements of the social economy for monetary policy.

There are generally four ultimate goals of monetary policy: stabilizing prices, achieving full employment, promoting economic growth, and balancing the international balance of payments.

Stabilizing prices: Stabilizing prices is the primary goal of the central bank's monetary policy, and the essence of price stability is the stability of currency value.

The so-called currency value originally refers to the gold content of a unit of currency. Under the conditions of modern credit currency circulation, measuring the stability of a currency's value is no longer based on the gold content of a unit of currency; it is based on the purchasing power of a unit of currency, that is, the purchase of a unit of currency under certain conditions.

Product capabilities.

It is usually expressed as a price index for a basket of goods, or a composite price index.

At present, governments and economists of various countries usually use the comprehensive price index to measure whether the currency value is stable.

An increase in the price index indicates currency depreciation; a decrease in the price index indicates currency appreciation.

Stabilizing prices is a relative concept, which means controlling inflation so that general price levels do not fluctuate sharply in the short term.

To measure whether prices are stable or not, judging from the situation of various countries, there are three indicators commonly used: First, the GNP (Gross National Product) average index, which targets the final products and services that constitute the gross national product and reflects the final products and services.

Changes in the price of labor services.

The second is the consumer price index, which targets consumers’ daily living expenses and can more accurately reflect changes in consumer price levels.

The third is the wholesale price index, which targets wholesale transactions and can more accurately reflect price changes in bulk wholesale transactions.

It should be noted that in addition to inflation, there are also factors within the normal range, such as seasonal factors, changes in consumer preferences, changes in economic and industrial structure, etc., which can also cause price changes.

In short, in a dynamic economic society, it is impossible to freeze prices at an absolute level. The question lies in whether prices can be controlled within the limits allowed by economic growth.

The determination of this limit varies from country to country and mainly depends on the economic development of each country.

In addition, traditional habits also have a great influence.

Some people believe that it is best for the price level to neither increase nor decrease, or to only be allowed to fluctuate within a range of 1%, which is price stability; others believe that it is impossible for the price level to neither increase nor decrease, as long as we can control prices

If the annual price increase is controlled at 1-2%, it is considered stable; some people believe that if the annual price increase is about 3%, it can be called price stability.

Full employment The so-called full employment goal is to maintain a high and stable level.

Under the condition of full employment, all workers who are capable and willing to participate can find suitable jobs at any time under reasonable conditions.

Full employment refers to the utilization of all available resources.

However, it is very difficult to measure the utilization degree of various economic resources. Generally, the employment degree of the labor force is used as the benchmark, that is, the unemployment rate index is used to measure the employment degree of the labor force.

The so-called unemployment rate refers to the ratio of the number of unemployed people in society to the labor force willing to be employed. The size of the unemployment rate also represents the degree of full employment in society.

Unemployment, in theory, represents a waste of production resources. The higher the unemployment rate, the more detrimental it is to social and economic growth. Therefore, all countries strive to reduce the unemployment rate to the lowest level in order to achieve their economic growth goals.

The main reasons causing unemployment are: 1. Insufficient aggregate demand.

Since the total social supply is greater than the total demand, various economic resources (including labor resources) in the economy and society cannot be utilized normally and fully.

The main manifestations are: First, cyclical unemployment.

This is unemployment caused by insufficient demand during the economic crisis and depression phases of the economic cycle.

The second is continued widespread unemployment.

This is real unemployment, which is unemployment caused by a long-term insufficient demand for labor caused by a long-term economic cycle or a series of cycles.

2. The distribution of total demand is unbalanced.

Because aggregate demand is unevenly distributed throughout the economy, there is a lack of demand in certain industry occupations or regions.

It is the result of the immobility of labor.

The main ones are: first, frictional unemployment.

Frictional unemployment occurs when workers in a certain type of occupation in one area of ??a country cannot find jobs, but there is a shortage of workers of this type in other areas.

Second, structural unemployment.

In the long-term changes in labor demand conditions and supply conditions, due to the immobility of labor, the types of labor supply and demand do not match.

There may be a shortage of labor in some emerging industries, while there may be a surplus of labor in some industries with sluggish production.

In addition, the adoption of new technologies will also cause changes in labor demand.

3. Seasonal unemployment.

Jobs in some industries are highly seasonal, and the technical jobs required for various seasonal jobs cannot be substituted for each other. Seasonal unemployment can be reduced, but it cannot be completely avoided.

4. Normal or transitional unemployment.

In a dynamic economic society, some people usually have to change their jobs, change careers, or change employers. Some may be transferred to work in other areas. When a certain contract expires, there will also be a surplus of labor.

In these situations, there is often a brief period of unemployment before finding another job.