In the impulse response function presented in the text, the effects of contractionary monetary policy on real GDP dissipate:
A) almost immediately.
B) after about 20 quarters.
C) after less than a year.
D) after about 3 to 4 quarters.
E) There is no effect on real GDP.

Question

Quizplus · Accepted Answer

The impulse response function typically shows that the effects of contractionary monetary policy on real GDP gradually dissipate over a longer period, often around 20 quarters, as the economy adjusts to the changes in monetary conditions.

In the Impulse Response Function Presented in the Text, the Effects