Why Are There Significant Time Lags in Monetary Policy

question 65

Multiple Choice

Why are there significant time lags in monetary policy?

• A) Financial markets are inefficient and information takes several months to impact them.
• B) Changes in monetary policy only affect future projects such as factories,not current ones.
• C) Interest rates takes several months to change after a change in money supply.
• D) Interest rates are fixed and it takes several months to change laws to have the targets amended.
• E) Because of the Fed's relative inability to convince Congress about the necessity of a particular monetary policy.

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