In the past twenty years the economy's responsiveness to monetary policy has become
A)weaker and more stretched out.
B)weaker and shorter.
C)stronger and more stretched out.
D)stronger and shorter.

Question

Quizplus · Accepted Answer

The economy's responsiveness to monetary policy has become weaker and more stretched out over the past twenty years. This is due in part to factors such as increased globalization and financial innovation, which have made it more difficult for central banks to influence economic outcomes through traditional monetary policy tools. Additionally, changes in the structure of the economy and the behavior of households and firms have also contributed to this weakening of the transmission mechanism between monetary policy actions and real economic activity.

In the Past Twenty Years the Economy's Responsiveness to Monetary