Which of the following makes it difficult for monetary policy-makers to institute policy changes in a manner that will promote economic stability?
A) Monetary policy-makers do not have sufficient tools to alter the supply of money.
B) The time lags between changes in monetary policy and when the changes exert an impact on output and prices are long and variable.
C) Monetary policy is unable to alter short-term interest rates.
D) Even though monetary policy can alter interest rates, there is little evidence that interest rates influence the demand for and prices of housing.

Question

Quizplus · Accepted Answer

The time lags between changes in monetary policy and when the changes exert an impact on output and prices are long and variable, making it difficult for monetary policy-makers to institute policy changes in a manner that will promote economic stability. Choices A, C, and D are inaccurate. Monetary policy-makers do have sufficient tools to alter the supply of money, monetary policy is able to alter short-term interest rates, and there is evidence that interest rates influence the demand for and prices of housing.

Which of the Following Makes It Difficult for Monetary Policy-Makers