Which of the following is true?
A)The policy lag refers to the time that elapses from the point when a significant and unexpected change in the economy's performance occurs to when policymakers recognize that such a change has occurred.
B)Most recently the Fed has emphasized the use of one or more of the monetary aggregates as an operating target.
C)Policymakers put more emphasis on economic forecasts than on incoming data because incoming data are often revised.
D)The comparison between the economy's expected performance and policymakers' policy goals guide monetary policy actions.

Question

Quizplus · Accepted Answer

The statement in option D is true. Policymakers use the comparison between the economy's expected performance and their policy goals to guide monetary policy decisions. The other options are incorrect. Option A refers to recognition lag, not policy lag. Option B is outdated; the Fed no longer uses monetary aggregates as an operating target. Option C is not accurate; policymakers rely on incoming data to make timely policy decisions.

Which of the Following Is True