Which of the Following Factors Mostly Determines the Lag Problem

question 27

Multiple Choice

Which of the following factors mostly determines the lag problem associated with monetary policy?

• A) the fact that business firms make investment plans far in advance
• B) the political system of checks and balances that slows down the process of determining monetary policy
• C) the time it takes for changes in government spending to affect the interest rate
• D) growth in the money supply is too slow

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