The associated with fiscal policy make(s) tuning difficult to implement successfully.
A)execution lag; gross
B)execution and decision lags; fine
C)execution lag; fine
D)decision lag; fine
E)decision lag; gross

Question

Quizplus · Accepted Answer

The question mentions the difficulty of implementing fiscal policy successfully, which implies that there are potential barriers or limitations that can affect its effectiveness. The answer that best reflects this idea is B, which highlights the impact of both execution and decision lags on the ability to fine-tune fiscal policy. Execution lag refers to the time it takes for policy changes to translate into tangible outcomes, which can be affected by factors such as administrative procedures, bureaucratic inefficiencies, or market responses. Decision lag, on the other hand, refers to the time it takes for policymakers to identify the need for policy changes, gather relevant data, build consensus, and take action, which can be influenced by political conflicts, ideological differences, or institutional constraints. Both of these lags can affect the timeliness and accuracy of fiscal policy adjustments, and if they are too long or too imprecise, they may lead to unintended consequences, such as inflation, recession, or debt accumulation. Therefore, the best choice is B, as it captures the interplay between these two sources of challenge for fiscal policy.

The Associated with Fiscal Policy Make(s) Tuning Difficult to Implement