A major difficulty for the Fed in controlling the economy is
A)the problem of timing; if the Fed acts now, that may lead to more problems later.
B)that the public may not concur with tightening policies.
C)that observers will second guess the Fed and exert political pressure on it.
D)that too much information from the Fed scares the public.

Question

Quizplus · Accepted Answer

The problem of timing is a major difficulty for the Fed because if they act too quickly or too slowly, it can have negative consequences for the economy. If they act too quickly to tighten policies, it could lead to a recession, while if they act too slowly, it could lead to inflation. Balancing these factors and finding the right time to act is a constant challenge for the Fed. The other choices may also be difficulties the Fed faces, but they are not as significant as the issue of timing.

A Major Difficulty for the Fed in Controlling the Economy