Because Congress decides on the federal government's budget during the year prior to when it will take effect, the tax laws and spending programs embodied in the budget ________ once they are in place. Because of this, the implementation lag for fiscal policy is ________.

Question

Quizplus · Accepted Answer

The question is asking about the implementation lag for fiscal policy, which refers to the time it takes for changes in tax and spending policies to affect the economy. Because Congress decides on the federal government's budget a year before it takes effect, the tax laws and spending programs embodied in the budget are hard to change once they are in place. Therefore, the implementation lag for fiscal policy is often quite long.

Because Congress Decides on the Federal Government's Budget During the Year