【正确答案】The Four Ultimate Targets of Monetary Policy 　　The four targets of monetary policy include: 　　(1) Economic growth, 　　(2) Price stability, 　　(3) Full employment, and 　　(4) Balance of payments equilibrium. 　　(1) Economic growth 　　Economic growth refers to the growth of a nation’s GDP which is the total value of goods and services domestically produced. People’s living standard has increased dramatically over history as result of the growth of the economy and its productivity. But growth means more than merely increasing total output. It requires that output increase faster than the population so that the average output per person expands. Economic growth in every country is the first target of monetary policy. Without certain growth rate, national economy will be in a state of stop or shrinkage and it will be impossible to enhance a nation’s economic strength and raise people’s living standard. 　　(2) Price stability 　　Price stability means the stability of currency value and control of inflation without great change of price level within certain period. The price stability reflects the general trend of price change or average level. In modern economic society, the general price level shows a rising trend in fact. Price stability is to limit the increase rate of the price level of a certain period within certain scope. As for the certain scope within which the increase rate of price level should be kept, there are different views among economists. Generally speaking, if the rising rate of price level is within 2%—3%, it can be called price stability. Consistently stable prices help create an environment in which the other economic targets are more easily reached. 　　(3) Full employment 　　Full employment means the people who have ability to work and are willing to work can find suitable jobs at present wage level. Full employment is measured with the unemployment rate of labor force. The unemployment rate is the ratio of the number of the unemployed and the labor force willing to work. The unemployment rate represents the extent of full employment in a society. Unemployment means a loss of potential output and imposes costs on the entire economy. 　　For many reasons, a high employment level is one of the paramount goals of monetary policy. Unemployment deprives families of their chief source of income, triggers a host of social problems such as increased incidence of crime and mental illness, and impacts most heavily on the disadvantaged and those at the lower end of the income scale. Collectively, increased unemployment reduces the nation’s level of output and income as well as tax revenues at all levels of government, thereby impairing such public services as roads, public security, and education. 　　Monetary policy affects the unemployment rate by influencing aggregate expenditures on goods and services and the level of the nation’s gross domestic product (GDP). As monetary policy becomes more stimulative, aggregate expenditures and GDP increase and the unemployment rate falls, sometimes below the natural rate. The natural unemployment rate is defined as the lowest level at which the nation’s unemployment rate can be maintained without triggering an increase in the existing inflation rate. If monetary policy becomes too stimulative and the nation’s unemployment rate falls below the natural rate, inflation accelerates. Hence, a goal of central bank policy is to keep the nation’s unemployment rate as close as possible to the natural unemployment rate without going below it. Unfortunately, the natural unemployment rate changes over time and is uncertain at any point in time. Most economists believe it is currently somewhere in the 5 to 6 percent range. 　　(4) Balance of payments equilibrium 　　Balance of payments is the total record of a country’s (or region’s) economic transactions, including money receipts from and payments to abroad, the difference between receipts and payments forms the surplus or deficit. It also includes some economic transactions even if they will never give rise to monetary settlements. Balance of payments during certain period reflects the state of economic development of a country and the country’s external economy. To maintain balance of payments equilibrium and reasonable quantity of foreign exchange are important conditions of a country’s stable development of economy and international intercourse. So to maintain balance of payment equilibrium should be another important target of monetary policy.