Recognition Lags in Fiscal Policy Stem Largely from

question 75

Multiple Choice

Recognition lags in fiscal policy stem largely from

• A) the fact that it takes time before a fiscal policy, such as a change in government purchases or a change in taxes, is agreed to and put into effect.
• B) the fact that it takes time for a policy action to have its full effect on aggregate demand.
• C) the difficulty of collecting economic data in a timely and accurate fashion.
• D) households and businesses may not respond to fiscal policy to the extent that policy makers had hoped, for example, they may not be as responsive to a tax cut .

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