Three policy lags limit the effectiveness of monetary policy: recognition lags,implementation lags,and impact lags.Of these three policy lags,fiscal policy is impacted by
A) only implementation and impact lags.
B) only recognition and implementation lags.
C) only recognition and impact lags.
D) all three policy lags.

Question

Quizplus · Accepted Answer

Fiscal policy is impacted by all three policy lags: recognition lag (time to identify economic issues), implementation lag (time to enact policy changes), and impact lag (time for the policy to affect the economy).

Three Policy Lags Limit the Effectiveness of Monetary Policy: Recognition