If the economy is in a boom, the implementation lag is generally shorter for fiscal policy than for monetary policy, but if the economy is in a slump, the implementation lag is generally shorter for monetary policy than for fiscal policy.

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The implementation lag for fiscal policy generally involves legislative approval, which can be lengthy regardless of the economic condition. Monetary policy, managed by a country's central bank, can often be adjusted more quickly in response to economic changes, making its implementation lag generally shorter than that of fiscal policy in both economic booms and slumps.

If the Economy Is in a Boom, the Implementation Lag