A significant lag for monetary policy is the time it takes to for a change in the money supply to change the economy. A significant lag for fiscal policy is the time it takes to pass legislation authorizing it.

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Monetary policy actions, such as changes in interest rates or the money supply, often take time to influence the economy due to factors like the decision-making process of businesses and consumers. Fiscal policy, involving government spending and taxation decisions, faces delays primarily due to the legislative process required to enact these changes.

A Significant Lag for Monetary Policy Is the Time It