Which of the following factors mostly determines the lag problem associated with monetary policy?
A)the fact that business firms make investment plans far in advance
B)the political system of checks and balances that slows down the process of determining monetary policy
C)the time it takes for changes in government spending to affect the interest rate
D)the time it takes to print money

Question

Quizplus · Accepted Answer

The lag problem associated with monetary policy is mostly determined by the fact that business firms make investment plans far in advance. It takes time for changes in monetary policy to affect the economic activity and for businesses to adjust their investment and spending plans accordingly.

Which of the Following Factors Mostly Determines the Lag Problem