In Practice, It Is Difficult to Keep Inflation and Output

Multiple Choice

In practice, it is difficult to keep inflation and output from fluctuating when aggregate expenditures change because:

A) It takes time for policymakers to recognize that shifts have occurred
B) Changes in interest rates do not have an immediate impact on the economy
C) Changes in consumer or business confidence can be very difficult to recognize as they are occurring
D) All of the answers given are correct