If there is a "long and variable time lag" between when a change in monetary policy is instituted and when it impacts aggregate demand and output, this will
A) make it easier for the Fed to properly time changes in monetary policy.
B) make it more difficult for the Fed to properly time changes in monetary policy.
C) not affect the Fed's ability to time monetary policy changes correctly.
D) make it easier for the Fed to control inflation and achieve price stability.

Question

Quizplus · Accepted Answer

If there is a long and variable time lag between when a change in monetary policy is instituted and when it impacts aggregate demand and output, it becomes more difficult for the Fed to time changes correctly. This is because the lag can vary and be unpredictable, making it harder to know when the effects of a policy change will be felt in the economy.

If There Is a "Long and Variable Time Lag" Between