CFA Practice Question

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CFA Practice Question

It is probably easier to use monetary policy than fiscal policy. Why?

I. Monetary policy has smaller recognition lags.
II. Monetary policy has smaller implementation lags.
III. Monetary policy has smaller outside lags.
IV. There are fewer forecasting uncertainties with monetary policy.
Correct Answer: II only

In the U.S., for example, the FOMC meets many times a year and can decide on policy changes at any time. It is easier to implement monetary policy than fiscal policy, which must generally go through Congress.

User Contributed Comments 10

User Comment
zeiad what is the Different between Monetray policy and fiscal policy
reganbaha MP inc or dec money supply
FP inc or dec taxes and govt spending etc.
YOUCANDOIT remember that:
change in budget due to Act of Congress => "discretionary fiscal policy"
change in budget due to change in GDP => "automatic fiscal policy"
gill15 Its not possible to not know the difference unless you skipped the first 6 sections of the chapter...
Shaan23 Zeiad must be randomly selecting questions.
ldfrench Better tell, zeiad, to "BUG OFF" becuz we don't tolerate any slackerz around here, right u guyz?!
Inaganti6 zeiad is trolling haha
maryprz14 zeiad; SERIOUSLY??!!
dbedford What is this webisite for?
khalifa92 all hail spaghetti monster
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