Long lags make discretionary policy less effective because
A) by the time the impact of a policy is felt, the problem may have been corrected by market forces.
B) it is easier to forecast an expansion than a recession.
C) it is easier to forecast a recession than an expansion.
D) automatic stabilizers are subject to longer lags than are discretionary policies.

Question

Quizplus · Accepted Answer

Long lags mean that there is a delay between implementing a policy and the impact of the policy being felt. During this time, market forces may have already corrected the problem, making the policy less effective.

Long Lags Make Discretionary Policy Less Effective Because