If one of the specific goals that central bankers focus on is economic growth, should they aim for the highest short-term growth rate the economy can achieve? Explain.

What will be an ideal response?

Central bankers do have economic growth as one of their goals, but the goal really focuses on the maximum sustainable growth rate or what is sometimes referred to as full potential growth rate. A sustainable growth rate is one that can be achieved using the resources available in a normal way. The growth of output then is determined by the growth of the inputs and technology (or as you learned in principles of economics, the concept of the production function). If central bankers try to push growth above the sustainable level the likely result would be rising inflation.