Time lags make:
A)fiscal policy more effective than monetary policy.
B)monetary policy more effective than fiscal policy.
C)correct use of both fiscal and monetary policy challenging.
D)both fiscal and monetary policy more effective.

Question

Quizplus · Accepted Answer

Time lags refer to the delay in the impact of policy measures on the economy. Fiscal policy involves government spending and taxation changes, which take time to implement and may only have an effect after the initial economic shock has passed. Monetary policy involves changes in interest rates, which can have a more immediate impact but still take some time to be fully effective. The presence of time lags makes the correct use of both fiscal and monetary policy challenging as it requires careful timing and coordination to achieve the desired economic outcomes. Therefore, option C is the best choice.

Time Lags Make