Which of the following explains why the monetary policy implementation lag is relatively short?
I. The FOMC meets several times a year and policymakers are easily able to confer in between meetings.
II. Open market operations, one of the Fed's policy instruments can be put into effect
Jimmediately.
III. The Chairman of the Fed works in close collaboration with the President.
IV. Most financial institutions are member banks and will not hesitate to put into effect any new monetary policy.

Question

Which of the following explains why the monetary policy implementation lag is relatively short? 
I. The FOMC meets several times a year and policymakers are easily able to confer in between meetings.
II. Open market operations, one of the Fed's policy instruments can be put into effect
Jimmediately.
III. The Chairman of the Fed works in close collaboration with the President.
IV. Most financial institutions are member banks and will not hesitate to put into effect any new monetary policy.

Quizplus · Accepted Answer

Option I states that the FOMC meets several times a year and policymakers are easily able to confer in between meetings, which makes the monetary policy implementation lag relatively short. Option II states that open market operations, one of the Fed's policy instruments, can be put into effect immediately, which also contributes to the short implementation lag. However, options III and IV are incorrect as collaboration between the Chairman of the Fed and the President does not necessarily affect the implementation lag, and financial institutions may hesitate to implement new monetary policy depending on their own interests and strategies.

Which of the Following Explains Why the Monetary Policy Implementation