What are lawmaking lags? What effect do they have on the use of discretionary fiscal policy?
What will be an ideal response?
Lawmaking lags refer to the fact that before discretionary policy can be implemented, Congress must pass an act. There can be significant time involved for Congress to debate and reach consensus on a specific piece of legislation. The time it takes is called the "lawmaking lag." Lawmaking lags make discretionary fiscal policy more difficult because by the time the policy is actually implemented, the state of the economy might have changed and so the newly enacted discretionary fiscal policy might now be the wrong policy.
You might also like to view...
Refer to Figure 7-2. With the tariff in place, the United States produces
A) 18 million pounds of coffee. B) 20 million pounds of coffee. C) 26 million pounds of coffee. D) 38 million pounds of coffee.
Assume that European interest rates fall as a result of decreased deficit spending by the governments of the European Union. We would expect all of the following, except:
a. a depreciation of the euro with respect to the U.S. dollar. b. increased European demand for American government securities. c. a higher level of U.S. imports from Europe. d. higher U.S. net exports to Europe. e. higher French exports to the United States.