How long does it take a change in monetary policy to influence aggregate demand?

A.Approximately how long does it take a change in monetary policy to influence aggregate demand?

 

a. one month

b. six months

c. two years

d. five years

B. Fiscal policy has a long lag mainly because

a. policymakers at the Federal Reserve do not meet frequently

b. firms making investments are slow to respond to changes in interest rates.

c. the political process is slow to enact changes in government spending or taxes.

d. consumers are slow to respond to changes in

their after-tax incomes.

C. According to traditional Keynesian analysis, which of the following increases aggregate demand the most?

a. $100 billion increase in taxes

b. $100 billion decrease in taxes

c. $100 billion increase in government purchases

d. $100 billion decrease in government purchases

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