Monetary policy will never be effective if interest rates
A)Change quickly.
B)Respond to a change in the money supply,and investment spending responds to a change in the interest rate.
C)Do not respond to a change in the money supply,and investment spending does not respond to changes in the interest rate.
D)Change slowly.

Question

Quizplus · Accepted Answer

Monetary policy relies on the ability of interest rates to respond to changes in the money supply and for investment spending to respond to changes in interest rates. If neither occurs, monetary policy cannot influence economic activity effectively.

Monetary Policy Will Never Be Effective If Interest Rates