The Effects of Any Change in Monetary Policy Lag

question 32

Multiple Choice

The effects of any change in monetary policy lag

• A) in part because they work through changes in the interest rate to alter investment and it takes a long time for investment projects to come to fruition.
• B) in part because they work through changes in the interest rate to alter net exports and it takes a long time for international markets to register the permanence of such a change.
• C) by such a long time that the maximum effect is generally felt one to two years after the policy adjustment.
• D) by such a long time that policy makers are reluctant to make large adjustments for fear of exacerbating a future problem in the event that conditions turn around.
• E) all of the above.

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Definitions:

Repetitive Process

A series of actions or operations that are performed over and over again, usually in a manufacturing or production setting.

Process Chart

A visual representation of the steps involved in a process, showing the sequence of tasks and decisions needed to complete a task or process.

Process Map

A visual representation of the steps, events, and operations that comprise a business process, showing how items flow through various stages.

Schematic Diagram

illustrates the elements of a system using abstract, graphic symbols rather than realistic pictures, emphasizing connections and relationships.