Inside lags are
A) longer for monetary policy than for fiscal policy.
B) longer for fiscal policy than for monetary policy.
C) the same for fiscal policy and monetary policy.
D) more variable for monetary policy than for fiscal policy.

Question

Quizplus · Accepted Answer

Inside lags refer to the time it takes for the policymaker to recognize a problem, decide on a policy, and implement it. Fiscal policy has longer inside lags because it requires coordination and agreement among multiple branches of government. Monetary policy, on the other hand, is implemented by a single entity (central bank) and can be executed relatively quickly after a decision is made.

Inside Lags Are