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:

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Rational Model

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Best Possible Alternative

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