All of the following are sources of the impact lag except
A) it takes some time for the deposit multiplier process to work itself out.
B) firms need some time to respond to the monetary policy with respect to their investment plans.
C) it takes time for the Fed to formulate a policy that best addresses a problem in the economy.
D) a monetary change is likely to affect the exchange rate, but that translates into a change in net exports only after some delay.

Question

Quizplus · Accepted Answer

The impact lag refers to the time it takes for changes in monetary policy to affect the broader economy. Options A, B, and D all describe factors that contribute to the impact lag, but option C refers to the time it takes for the Fed to formulate policy, which is not part of the impact lag.

All of the Following Are Sources of the Impact Lag