The time between when income taxes are cut and when consumption spending increases is an example of:
A)the outside lag of macroeconomic policy.
B)the inside lag of macroeconomic policy.
C)the outside lag of monetary policy.
D)the inside lag of fiscal policy.

Question

Quizplus · Accepted Answer

The outside lag of macroeconomic policy refers to the time it takes for a policy action to have an effect on the economy. In this case, the time between cutting income taxes and the resulting increase in consumption spending is an example of an outside lag.

The Time Between When Income Taxes Are Cut and When