Which of the Following Is NOT a Reason Why,in Practice,monetary

question 48

Multiple Choice

Which of the following is NOT a reason why,in practice,monetary policy-making is much more complex than the theory would suggest?

• A) The central bank's knowledge of how the real world works is imperfect.
• B) The central bank's knowledge of the output gap is imprecise.
• C) The central bank's knowledge of the timing of a monetary policy action on the economy is imperfect.
• D) The central bank's knowledge of the magnitude of the effect of a given interest rate change on planned aggregate expenditure is imprecise.
• E) The central bank's ability to change the overnight rate is limited.

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