When conducting monetary policy, a central bank should
A)never monetize the budget deficit since this will lower the level of investment
B)be less concerned with current conditions than with future conditions
C)always try to keep interest rates low
D)always respond to expansionary fiscal policy by expanding money supply
E)none of the above

Question

Quizplus · Accepted Answer

Central banks often focus on future conditions because monetary policy affects the economy with a lag, so they must anticipate future economic conditions to achieve their goals.

When Conducting Monetary Policy, a Central Bank Should