Advocates of discretionary policy usually view ________ policy as having a longer effectiveness lag than ________ policy,but there is substantial uncertainty about how long this lag is.

Question

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Advocates of discretionary policy usually view monetary policy as having a longer effectiveness lag than fiscal policy. This is because changes in monetary policy take time to work their way through financial markets and the broader economy. However, there is substantial uncertainty about how long this lag is, as it can depend on a variety of factors such as the nature of the shock to the economy and the responsiveness of households and firms to changes in interest rates.

Advocates of Discretionary Policy Usually View ________ Policy as Having