Which of the following is considered a limitation of monetary policy?
A) The cause-effect chain
B) Its cyclical asymmetry
C) Its isolation from political pressure
D) The speed with which it can be implemented

Question

Quizplus · Accepted Answer

The cyclical asymmetry of monetary policy refers to the fact that it may be more effective in contracting the economy during a recession than in stimulating the economy during an expansion. This is a limitation because it can make it difficult to achieve both stable growth and low inflation using only monetary policy. A, C, and D are not limitations of monetary policy. The cause-effect chain refers to the ability of monetary policy actions to affect the economy, which is actually a strength. Isolation from political pressure is desirable because it allows central banks to make decisions based on the economic needs of the country without interference from politicians. The speed with which it can be implemented is also a strength because it allows for quick action in response to economic changes.

Which of the Following Is Considered a Limitation of Monetary