The lag between the time that economic stimulus is needed and the time that a tax cut is passed by Congress is an example of a:
A)fiscal inside lag. fiscal
B)outside lag. monetary
C)inside lag. monetary
D)outside lag.

Question

Quizplus · Accepted Answer

Fiscal inside lag refers to the time it takes for policymakers to recognize the need for economic stimulus and to implement the necessary fiscal policy (such as tax cuts or government spending increases). The lag between the need for stimulus and the passage of a tax cut by Congress is an example of a fiscal inside lag because it takes time for policymakers to reach agreement on the best course of action, draft legislation, and ultimately pass it into law.

The Lag Between the Time That Economic Stimulus Is Needed