Monetary policy is more effective in changing real GDP growth if the policy is more credible.

Question

Quizplus · Accepted Answer

If a country's monetary policy is seen as credible by businesses and consumers, it can increase their confidence and willingness to invest and spend, leading to a more significant impact on real GDP growth. On the other hand, if the policy is not seen as credible, businesses and consumers may not respond to it in the intended way, limiting its effectiveness in changing real GDP growth.

Monetary Policy Is More Effective in Changing Real GDP Growth