If changes in monetary policy are going to help stabilize the economy, they must
A) be expansionary.
B) be restrictive.
C) reduce the real rate of interest.
D) be properly timed.
E) stimulate aggregate demand.

Question

Quizplus · Accepted Answer

In order to be effective, changes in monetary policy must be properly timed to coincide with economic conditions and avoid exacerbating economic instability. Expansive or restrictive policies and reductions in the real rate of interest or stimulation of aggregate demand may or may not be necessary depending on the economic situation, but proper timing is crucial for their effectiveness.

If Changes in Monetary Policy Are Going to Help Stabilize