1) When economists say that monetary policy can exhibit cyclical asymmetry, this

Question

1) When economists say that monetary policy can exhibit cyclical asymmetry, this means

expansionary and restrictive monetary policy cannot both be used for economic expansion and contraction.
expansionary and restrictive monetary policy do not have the same potential for economic expansion and contraction.
the Fed is only able to deal with inflation.
recessions are shorter than inflations.

2) The Federal funds rate is


nearly the same as the prime interest rate because they are both short term loans.
higher than the prime interest rate because it is more risky to lend overnight.
lower than the prime interest rate because federal funds are loaned overnight.
not comparable to the prime interest rate since the lenders are different.

Explanation / Answer

1) expansionary and restrictive monetary policy do not have the same potential for economic expansion and contraction.

2) lower than the prime interest rate because federal funds are loaned overnight.

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