Typically,discretionary fiscal policy changes have to be approved by the parliament so a detailed proposal needs to be put forward by the government; parliamentary approvement may take a significant amount of time.As a result,________ for fiscal policy can be several months longer than for monetary policy.
A) the response and recognition lags
B) the recognition lag
C) the response lag
D) all three policy lags

Question

Quizplus · Accepted Answer

The response lag for fiscal policy is longer because it involves the time taken for the government to propose and for the parliament to approve changes, which can be lengthy compared to monetary policy adjustments.

Typically,discretionary Fiscal Policy Changes Have to Be Approved by the Parliament