Time Lags in the Conduct of Monetary Policy Can Cause

question 44

Multiple Choice

Time lags in the conduct of monetary policy can cause

• A)monetary policy to work in the opposite direction to what was initially predicted by economists.
• B)an expansionary policy to have a smaller effect than what was expected by policymakers.
• C)monetary expansions to work very quickly but cause monetary contractions to work very slowly.
• D)difficulty in the timing of appropriate policy and can even lead to destabilization.
• E)short-term monetary policy to work more effectively than long-term targeting.

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