Part of the lag in monetary policy effects is due to
A)the long political process of monetary policy decisions.
B)precise economic forecasts.
C)the time required for firms and households to alter their spending plans.
D)changes in the unemployment rate.

Question

Quizplus · Accepted Answer

The time required for firms and households to alter their spending plans is a significant factor in the lag of monetary policy effects. It takes time for individuals and firms to adjust their spending and investment decisions in response to changes in interest rates or money supply. The other choices (A, B, D) are not accurate explanations for the lag in monetary policy effects.

Part of the Lag in Monetary Policy Effects Is Due