Assume that the Fed knows a demand shock has occurred in the economy. It takes the Fed 2 months to adjust policy to the shock, and it takes the economy 14 months for the policy change to affect the economy
The 2 month time period refers to the ________, and the following 14 month time period refers to the ________. A) policy lag; implementation lag
B) recognition lag; implementation lag
C) implementation lag; impact lag
D) policy lag; recognition lag
C
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Suppose that the conditional variance is var(ui|Xi) = ?h(Xi) where ? is a constant and h is a known function. The WLS estimator is
A) the same as the OLS estimator since the function is known B) can only be calculated if you have at least 100 observations C) the estimator obtained by first dividing the dependent variable and regressor by the square root of h and then regressing this modified dependent variable on the modified regressor using OLS D) the estimator obtained by first dividing the dependent variable and regressor by h and then regressing this modified dependent variable on the modified regressor using OLS
Why are economic theories and principles imprecise? Shouldn’t they apply to everyone?
Please provide the best answer for the statement.