Which of the Following Makes It More Difficult for Monetary

question 101

Multiple Choice

Which of the following makes it more difficult for monetary policy makers to time policy changes correctly?

• A) Monetary policy makers cannot act without congressional approval.
• B) The primary effects of the policy change will not be felt for 6 to 15 months into the future.
• C) The Board of Governors of the Federal Reserve System does not meet very often.
• D) Monetary policy affects only the general level of prices; it exerts no impact on real variables such as output and employment.

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Definitions:

Neoclassical Economics

A framework in economics focusing on the determination of goods, outputs, and income distributions in markets through supply and demand, emphasizing rationality and marginal utility.

Sense of Fairness

An individual's perception of the balance and justice in social interactions and distribution of resources.

Dictator Game

A behavioral experiment that tests how fairly individuals act towards others when given the unilateral power to determine the distribution of a resource.

Nudges

Subtle policy measures or cues that encourage people to make decisions that are in their broad self-interest without restricting their freedom of choice.