Because the Fed can react to changes in the economy much more quickly than can Congress, time lags exist for fiscal policy but not for monetary policy.

Question

Quizplus · Accepted Answer

Both fiscal and monetary policies have time lags, but the types and durations of these lags can differ. Monetary policy can often be implemented more quickly than fiscal policy, but it still faces decision, effect, and operational lags.

Because the Fed Can React to Changes in the Economy