The Lag Between the Time That Economic Stimulus Is Needed

question 54

Multiple Choice

The lag between the time that economic stimulus is needed and the time that a tax cut is passed by Parliament is an example of a:

• A)fiscal inside lag.
• B)fiscal outside lag.
• C)monetary inside lag.
• D)monetary outside lag.

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Definitions:

EDC

Often refers to Economic Development Corporations, which are organizations focused on promoting economic growth within a specific geographic area.

Swaps

Financial derivatives where two parties exchange financial instruments or cash flows.

Gilts

Government bonds issued by the United Kingdom, considered low-risk investments since they are backed by the British government.

Unbiased Forward Rates

Interest rates or currency exchange rates that are equal to the expected future spot rates, implying no arbitrage opportunities.