The Principal Reason That Monetary Policy Has Lags Is That

question 214

Multiple Choice

The principal reason that monetary policy has lags is that it takes a long time for

• A)changes in the interest rate to change aggregate demand.
• B)changes in the money supply to change interest rates.
• C)the Fed to make changes in policy.
• D)the federal government to change the tax code.

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Definitions:

Serial-Order Effect

The psychological phenomenon that the order of information presentation affects memory recall, often seen in lists or sequences.

Depth of Processing

A concept in cognitive psychology that describes the level at which information is thought about, where deeper levels of analysis lead to better memory retention.

Korsakoff's Syndrome

A chronic memory disorder caused by severe deficiency of thiamine (vitamin B1), often associated with prolonged alcoholism.

Retroactive Interference

A memory phenomenon where newly learned information interferes with the recall of previously learned information.