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
Immediately.
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.
A) I
B) I and II
C) I, II, and III
D) I, II, III, and IV

Question

Quizplus · Accepted Answer

The monetary policy implementation lag is relatively short because of the ability to conduct open market operations immediately and the FOMC is able to meet several times a year and policymakers can easily confer in between meetings. However, the collaboration between the Chairman of the Fed and the President and the willingness of member banks to put new monetary policy into effect do not significantly contribute to the short implementation lag.

Which of the Following Explains Why the Monetary Policy Implementation