Which of the Following Is a Problem in Pursuing Monetary

question 58

Multiple Choice

Which of the following is a problem in pursuing monetary policy?

• A) The lag between a change in the quantity of money and its effect on economic activity is too short.
• B) Monetary policy must be approved by the Congress.
• C) The Fed cannot control the federal funds rate.
• D) None of the above answers is correct.

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Definitions:

Wage Flexibility

The ease with which wages can adjust to match the supply and demand for labor, helping in the correction of labor market imbalances.

Full Employment

A situation in which all available labor resources are being used in the most economically efficient way, typically marked by the absence of cyclical unemployment.

John Maynard Keynes

A British economist whose theories on the causes of prolonged unemployment and the role of government intervention in economies formed the basis of Keynesian economics.

Full Employment

A condition in the economy where all potential labor forces are utilized in the most economically effective manner.