In General, What Is the Longest Lag for Fiscal and Monetary

question 68

Multiple Choice

In general, what is the longest lag for fiscal and monetary policy?

• A) For both fiscal and monetary policy, it is the time it takes to change policy.
• B) For both fiscal and monetary policy, it is the time it takes for policy to affect aggregate demand.
• C) For monetary policy, it is the time it takes to change policy, while for fiscal policy the longest lag is the time it takes for policy to affect aggregate demand.
• D) For fiscal policy, it is the time it takes to change policy, while for monetary policy the longest lag is the time it takes for policy to affect aggregate demand.

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Definitions:

Self-Serving Bias

A cognitive bias that causes individuals to attribute their successes to internal or personal factors while attributing failures to external or situational factors.

Aversive Prejudice

Subtle, often unconscious prejudice that manifests in avoidance of certain groups or individuals, without overt hostility or hatred.

Stereotypes

Oversimplified generalized ideas about a group of people that often do not reflect reality and can result in unfair assumptions.

Assumptions

Things that are accepted as true or as certain to happen, without proof.