If an Economic Disturbance Is Known to Be Transitory

Multiple Choice

If an economic disturbance is known to be transitory,

A) discretionary monetary policy should be undertaken because of its short outside lag
B) discretionary fiscal policy should be undertaken because of its short inside lag
C) consumption is likely to be significantly affected
D) policy makers should proceed cautiously, since there is always the possibility that any policy action may itself be destabilizing
E) none of the above