Fiscal policy has a relatively long ______ lag, and monetary policy has a relatively long ______ lag.
A) inside; outside
B) outside; inside
C) inside; inside
D) outside; outside

Question

Quizplus · Accepted Answer

Fiscal policy has a relatively long inside lag because it takes time for the government to recognize economic issues and implement policy changes. Monetary policy has a relatively long outside lag because, once implemented, it takes time for changes in interest rates to affect the economy.

Fiscal Policy Has a Relatively Long ______ Lag, and Monetary