Which of the following statements is (are) correct with regard to Lags in Monetary Policy versus Fiscal Policy?Statement 1: An inside lag exists between the time a policy change is needed and the time the Fed identifies the problemand decides which policy tool to use. The inside lag for monetary policy is shorter than for fiscal policy because fiscal policyis usually the result of a long political budget process.Statement 2: An outside lag occurs between the time a policy decision is made and the time the policy change has its effecton the economy.Statement 3: The total lag (inside plus outside lags) is longer for monetary policy than it is for fiscal policy.O Statements 2 and 3 only.O Statement 3 only.O All statements.O Statements 1 änd 2 only.

Fiscal policy refers to the actions taken by the government to interfere in the economy. Monetary…

Policy? Statement 1: An inside lag exists between the time a policy change is needed and the time the Fed identifies the problem and decides which policy tool to use. The inside lag for monetary policy is shorter than for fiscal policy because fiscal polic is usually the result of a long political budget process. Statement 2: An outside lag occurs between the time a policy decision is made and the time the policy change has its effe on the economy. Statement 3: The total lag (inside plus outside lags) is longer for monetary policy than it is for fiscal policY. O Statements 2 and 3 only. O Statement 3 only. O All statements. O Statements 1 and 2 only.

Policy? Statement 1: An inside lag exists between the time a policy change is needed and the time the Fed identifies the problem and decides which policy tool to use. The inside lag for monetary policy is shorter than for fiscal policy because fiscal polic is usually the result of a long political budget process. Statement 2: An outside lag occurs between the time a policy decision is made and the time the policy change has its effe on the economy. Statement 3: The total lag (inside plus outside lags) is longer for monetary policy than it is for fiscal policY. O Statements 2 and 3 only. O Statement 3 only. O All statements. O Statements 1 and 2 only.

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter15: The Debate Over Monetary And Fiscal Policy

Section: Chapter Questions

Problem 3DQ

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