Monetary policy:
A)can be made more effective with the presence of a liquidity trap.
B)is less hampered by the political process than fiscal policy.
C)has been proven to be an ineffective tool in controlling business cycles.
D)works well only if it is well coordinated with fiscal policy efforts.

Question

Quizplus · Accepted Answer

Monetary policy is less hampered by the political process than fiscal policy because it is set by a central bank that is independent from political influence. However, it is important to note that the effectiveness of monetary policy may be influenced by a variety of factors including economic conditions and the presence of a liquidity trap. It is also not entirely clear whether monetary policy is always effective in controlling business cycles.

Monetary Policy