The lag problem associated with fiscal policy is due mostly to
A)the fact that business firms make investment plans far in advance.
B)the political system of checks and balances that slows down the process of implementing fiscal policy.
C)the time it takes for changes in government spending or taxes to affect the interest rate.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

The lag problem in fiscal policy is primarily due to the political system of checks and balances, which can delay the implementation of policy changes.

The Lag Problem Associated with Fiscal Policy Is Due Mostly