The implementation lag for fiscal policy is longer than for monetary policy because
A)it takes longer for the Fed to act than Congress.
B)it takes longer for Congress to act than the Fed.
C)fiscal policy changes more quickly affect behavior than monetary policy changes.
D)monetary policy changes more quickly affect behavior than fiscal policy changes.

Question

Quizplus · Accepted Answer

Fiscal policy involves the process of deciding on and implementing changes to government spending and taxation. This requires the approval of Congress and can take a significant amount of time before implementation. On the other hand, monetary policy involves the actions of the central bank, such as adjusting interest rates or the money supply, which can be implemented relatively quickly. Therefore, the implementation lag for fiscal policy is longer than for monetary policy because it takes longer for Congress to act than the Fed.

The Implementation Lag for Fiscal Policy Is Longer Than for Monetary