The Lag Problem Associated with Monetary Policy Is Due Mostly

question 37

Multiple Choice

The lag problem associated with monetary policy is due mostly to

• A)the fact that business firms make investment plans far in advance.
• B)the political system of checks and balances that slows down the process of determining monetary policy.
• C)the time it takes for changes in government spending to affect the interest rate.
• D)All of the above are correct.

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Definitions:

Cortex

The outer layer of the brain involved in high-level functions such as consciousness, memory, thought, and emotion.

Sensory Inputs

Information received by sensory systems from the environment or the body, which is then processed by the brain.

Cortex

Refers to the outer layer of the cerebrum, involved in complex functions including memory, attention, perception, cognition, awareness, thought, language, and consciousness.

Limbic System

The limbic system is a complex set of brain structures involved in emotion, behavior, motivation, long-term memory, and olfaction.