Which of the following is a problem in pursuing monetary policy?
A) The lag between a change in the quantity of money and its effect on economic activity is too short.
B) Monetary policy must be approved by the Congress.
C) The Fed cannot control the federal funds rate.
D) None of the above answers is correct.

Question

Quizplus · Accepted Answer

The statements A, B, and C are incorrect regarding the problems in pursuing monetary policy. The lag between a change in the quantity of money and its effect on economic activity is often considered too long rather than too short, making timely adjustments challenging. Monetary policy decisions, including adjustments to the federal funds rate, are made by the Federal Reserve (the Fed) and do not require approval by Congress. The Fed can indeed influence the federal funds rate through open market operations and other tools.

Which of the Following Is a Problem in Pursuing Monetary