One of the major weaknesses of the Federal Reserve Bank of St. Louis econometric model was that it
A) was large and cumbersome.
B) was limited to analyzing an economy with substantial unemployment.
C) did not specify the categories of private spending that were affected by monetary policy.
D) included a government spending multiplier that was clearly too high.

Question

Quizplus · Accepted Answer

The Federal Reserve Bank of St. Louis econometric model did not specify the categories of private spending that were affected by monetary policy, which is a major weakness. This means that it was not fully able to accurately predict how the economy would respond to different changes or interventions in monetary policy.

One of the Major Weaknesses of the Federal Reserve Bank