The effectiveness of monetary policy is influenced by
A)The time it takes for lower interest rates to make investment spending more profitable.
B)The willingness of Congress to implement it.
C)How responsive the money supply is to changes in taxes.

Question

Quizplus · Accepted Answer

The effectiveness of monetary policy depends on how quickly lower interest rates can stimulate investment spending. This is because it takes some time for businesses and individuals to make investment decisions and then carry out those decisions. Therefore, it is important for monetary policymakers to anticipate economic conditions and adjust interest rates accordingly in advance. The willingness of Congress to implement monetary policy and the responsiveness of the money supply to changes in taxes are not direct factors affecting the effectiveness of monetary policy.

The Effectiveness of Monetary Policy Is Influenced by