The problem of "cyclical asymmetry" refers to the notion that:
A)monetary policy may be more successful in slowing expansions and controlling inflation than in extracting the economy from severe recession.
B)the monetary authorities have been less willing to use an expansionary monetary policy than they have a restrictive monetary policy.
C)cyclical downswings are typically of longer duration than cyclical upswings.
D)an expansionary monetary policy can force an expansion of the money supply, but a restrictive monetary policy may not achieve a contraction of the money supply.

Question

Quizplus · Accepted Answer

The problem of "cyclical asymmetry" refers to the fact that monetary policy may be more effective in slowing down expansions and controlling inflation, but may not be as effective in getting the economy out of a deep recession. This is because interest rates can only be lowered so much before hitting the zero lower bound, and there may already be a lack of demand for credit during recessions.

The Problem of "Cyclical Asymmetry" Refers to the Notion That