consider the ripple effects of monetary policy, and then choose the option that

Question

consider the ripple effects of monetary policy, and then choose the option that is correct se the option that is correct O A. The long-term real interest rate that influences spending plans is linked tightly to the federal funds rate O B. On average, in response to the Fed taking an action to change the course of the economy, real GDP begins to change within one month ° C. The economy does not always respond in the same way to a given policy change. D. O E. The Fed is helped in its monetary policy decisions by the fact that the monetary policy transmission process is extremely predictable Short-term interest rates are slow to change in response to a change in the federal funds rate Click to select your answer

Explanation / Answer

the ripple effect tells us that when the monetary policy is taken up by the FED then there is some monetary transmission. Suppose interest rate is cut down then the investment increassed, employemnt increases, consumption increases leading to GDP growth.

So from the above options, Option A is the closest.

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