Time lags mean that
A) fiscal policy is more effective than monetary policy.
B) economic policy may be inappropriate when it takes effect.
C) economic policy will be ineffective.
D) monetary policy is more effective than fiscal policy.

Question

Quizplus · Accepted Answer

Time lags refer to the delay between implementing a policy and seeing its effects on the economy. Fiscal and monetary policies both have time lags, but monetary policy generally has a shorter time lag than fiscal policy. Therefore, time lags can make economic policy inappropriate or ineffective when it takes effect, as economic conditions may have changed by the time the policy has an impact.

Time Lags Mean That