One of the Difficulties in Implementing Monetary Policy Is the Time

question 110

Multiple Choice

One of the difficulties in implementing monetary policy is the time it takes:

• A) to pass new monetary policy once the Fed has decided action is needed.
• B) monetary policy to have an effect in the economy once enacted.
• C) to enact monetary policy once the Fed has decided action is needed.
• D) to get approval from the Congress to implement the policy.

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Definitions:

Debt Financing

Raising capital through the sale of bonds, bills, or notes to individuals or institutional investors. In return for lending the money, the individuals or institutions become creditors and receive a promise to repay principal and interest on the debt.

Financial Risk

The possibility of losing money or the uncertainty in achieving the expected returns mainly due to market movements, interest rates, or credit failure.

ROE

Return on Equity is an indicator of a company's financial performance, indicating the amount of profit made from the shareholders' investments.

Financial Leverage

The action of using debt to magnify the expected return on an investment.