List and describe three of the five different lags that can occur which may impede the effectiveness of the use of fiscal policy
Data lag - The time it takes for policymakers to be aware of changes in the economy.
Wait-and-see lag - Rather than act upon a change in the economy immediately, policymakers will generally wait some time period to determine if this is more than just a short-run phenomenon.
Legislative lag - The time it takes for the President and Congress to build political support for a fiscal policy measure and the time it takes to pass this legislation.
Transmission lag - After a fiscal policy measure is enacted, it takes some time for the tax change or spending change to actually take effect.
Effectiveness lag - The time it takes after a policy is put into effect before this action has in impact on the economy.
You might also like to view...
Which of the following describe the United States' unemployment rate over the last 80 years?
i. The unemployment rate has decreased each year since the Great Depression. ii. The unemployment rate has averaged about 5.7 percent since 1929. iii. Job creation due to defense spending and consumer spending in the 1960s drove the unemployment rate to one of its lowest level. A) i and ii only B) ii and iii only C) i, ii and iii D) i only E) i and iii
The private financial market where banks borrow and loan reserves to meet the minimum research requirements is called:
A) federal funds market. B) loanable funds market. C) discount loans market. D) repo market.