The implementation lag for monetary policy is _____ for monetary policy than fiscal policy; the lag before the full effects of monetary policy on inflation are felt is ____ than for its effects on real output and unemployment:
A)Longer, longer
B)Longer; shorter
C)Shorter; longer.
D)Shorter; shorter

Question

The implementation lag for monetary policy is _____ for monetary policy than fiscal policy; the lag before the full effects of monetary policy on inflation are felt is ____ than for its effects on real output and unemployment:
A)​Longer, longer
B)​Longer; shorter
C)​Shorter; longer.
D)​Shorter; shorter

Quizplus · Accepted Answer

The implementation lag for monetary policy is generally shorter than for fiscal policy because changes in monetary policy (such as adjustments in interest rates or reserve requirements) can be enacted more quickly by central banks than fiscal measures (which often require legislative approval). However, the effects of monetary policy on inflation take longer to materialize compared to its effects on real output and unemployment, due to various factors including the time it takes for price adjustments to spread through the economy.

The Implementation Lag for Monetary Policy Is _____ for Monetary