An Expansionary Monetary Policy May Be Less Effective Than a Restrictive

Multiple Choice

An expansionary monetary policy may be less effective than a restrictive monetary policy because:

A) the Bank of Canada is always willing to make loans to chartered banks that are short of reserves.
B) fiscal policy always works at cross purposes with an expansionary monetary policy.
C) the circularity or feedback problem complicates an expansionary monetary policy more than it does a restrictive monetary policy.
D) chartered banks may not be willing to lend their excess reserves to the customers.