One of the timing problems with fiscal policy is an "operational lag" that occurs between the:
A)beginning of a recession and the time that it is recognized that the event is occurring.
B)time the need for fiscal action is recognized and the time that action is actually taken.
C)time that fiscal action is taken and the time that action has an impact on output, employment, and the price level.
D)time that fiscal action has an impact on output, employment, and the price level and the time by which it can be determined if the policy is effective.

Question

Quizplus · Accepted Answer

The operational lag refers to the time between when fiscal action is taken and when it has an impact on output, employment, and the price level. This lag can be variable, and it can take time for changes in government spending and taxation to affect the economy. Therefore, even if policymakers recognize the need for fiscal action, it may take some time for that action to have an effect on the economy.

One of the Timing Problems with Fiscal Policy Is an "Operational