Time lags that often erode effectiveness of monetary and fiscal policy measures represent
A) the change in export and import prices.
B) the foreign response to price changes.
C) delays in the response of the economy to stabilization policy.
D) the change in exchange rates.

Question

Quizplus · Accepted Answer

Time lags refer to the delay in the response of the economy to stabilization policies, which can erode the effectiveness of monetary and fiscal policy measures. Factors such as changes in export and import prices, foreign response to price changes, and exchange rate fluctuations may also have an impact on the economy, but they are not necessarily indicative of time lags.

Time Lags That Often Erode Effectiveness of Monetary and Fiscal