The Problem of Lags Suggests That Monetary Policy Should

question 178

Multiple Choice

The problem of lags suggests that monetary policy should

• A) respond swiftly to statistical reports of economic conditions in the recent past.
• B) respond to conditions expected to exist in the future.
• C) stagger its implementation of policies so that there will be an ongoing effect on the economy.
• D) not respond to changing economic conditions in the economy but instead rely on the economy's self correcting mechanism.

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