Which of the following will make it difficult for the Fed to institute shifts in monetary policy in a manner that will promote economic stability?
A)the inability of the Fed to alter the money supply
B)the long and variable time lags between shifts in monetary policy and impact on output and employment
C)a velocity rate of money that is relatively constant
D)the inability of the Fed to shift monetary policy without the approval of Congress

Question

Quizplus · Accepted Answer

The long and variable time lags between shifts in monetary policy and impact on output and employment make it difficult for the Fed to institute shifts in monetary policy in a manner that will promote economic stability. This is because the Fed's decisions may take several months or even years to fully impact the economy, making it challenging to manage the economy effectively. A, C, and D are not correct as the Fed has the power to alter the money supply, the velocity rate of money can change over time, and the Fed does not require approval from Congress to shift monetary policy.

Which of the Following Will Make It Difficult for the Fed