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Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383

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BuyFindarrow_forward

Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383
Textbook Problem

Identify and explain the five lags associated with fiscal policy.

To determine

The five fiscal policy lags.

Explanation

The effectiveness of the fiscal policy is always questioned by the lags involved in it. There are mainly five lags. They are listed below:

  • Data lag: The policy makers are not aware about the economic changes exactly when it appears. For example, if the economy starts to fall in the beginning of January, it becomes evident at the middle of the next month.
  • Wait-and-see lag: Generally, the policy makers have a wait-and-see attitude when they aware about the economic changes. They do not take any immediate counteractive measures...

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