Monetary policy
A)can be implemented quickly and most of its impact on aggregate demand occurs very soon after policy is implemented.
B)can be implemented quickly,but most of its impact on aggregate demand occurs months after policy is implemented.
C)cannot be implemented quickly,but once implemented most of its impact on aggregate demand occurs very soon afterward.
D)cannot be implemented quickly and most of its impact on aggregate demand occurs months after policy is implemented.

Question

Quizplus · Accepted Answer

Monetary policy can be implemented quickly, but its impact on aggregate demand usually takes several months to show up in the economy. The Federal Reserve, for example, usually takes several meetings to adjust the federal funds rate, and it can take some time for these rate changes to filter through the financial system and affect borrowing, spending, and investment decisions. Therefore, monetary policy is best thought of as a tool that can influence the economy's trajectory over time, rather than as a quick fix for short-term problems.

Monetary Policy