Each of the following is a difficulty associated with attempting to control planned expenditure by manipulating interest rates except
A) our knowledge of the structure of the economy is imperfect.
B) economic policy works with long and variable lags.
C) the interest rates that the Federal Reserve can control are short-term, nominal, safe, interest rates.
D) people are generally unwilling to purchase short-term government bonds.

Question

Quizplus · Accepted Answer

The willingness of people to purchase short-term government bonds does not directly relate to the difficulties of controlling planned expenditure through interest rate manipulation. The other options (A, B, C) directly address the challenges faced when using interest rates to influence economic activity, such as imperfect knowledge of the economy, the delayed and unpredictable effects of policy changes, and the limited scope of interest rates that can be controlled by the Federal Reserve.

Each of the Following Is a Difficulty Associated with Attempting