Based on the record of past business cycles as well as Fed behavior,we can estimate that for expansionary monetary policy the overall lag is approximately
A)eighteen months,about half of which is the effectiveness lag.
B)twenty months,slightly more than three-quarters of which is the effectiveness lag.
C)ten months,with less than half due to the effectiveness lag.
D)nine months,with the effectiveness lag responsible for about six months.

Question

Quizplus · Accepted Answer

Based on the record of past business cycles, the overall lag for an expansionary monetary policy is estimated to be around 20 months. Of this, around three-quarters or 15 months is the effectiveness lag, which is the time it takes for changes in monetary policy to affect the economy.

Based on the Record of Past Business Cycles as Well