Which of the Following Statements Is Correct Regarding the Lags

question 42

Multiple Choice

Which of the following statements is correct regarding the lags in fiscal and monetary policy?

• A) The inside lag is the time needed for monetary policy to be effective while the outside lag is the time needed for fiscal policy to be effective.
• B) The outside lag is the time needed for monetary policy to be effective while the inside lag is the time needed for fiscal policy to be effective.
• C) The lag for monetary policy is shorter than the lag for fiscal policy.
• D) The lag for fiscal policy is shorter than the lag for monetary policy.

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Definitions:

Weighted Average Float

The average time between when a check is deposited in a bank and when the funds are available.

Payments

Transactions or transfers of money or its equivalent from one party to another as a form of exchange for goods, services, or to fulfill a legal obligation.

Weighted Average Delay

A measure that calculates the average delay in a system, project, or process, taking into account the weight of each component's delay.