The Difference Between an Inside Lag and an Outside Lag

question 2

Multiple Choice

The difference between an inside lag and an outside lag is best described as:

• A) an inside lag is the time needed for monetary policy to be effective while an outside lag is the time needed for fiscal policy to be effective.
• B) an inside lag is usually much longer than an outside lag.
• C) an inside lag is the time between when a policy change is needed and when the Fed identifies the problem and solution, while an outside lag is the time between a policy decision and its effect on the economy.
• D) an outside lag is the time between when a policy change is needed and when the Fed identifies the problem and solution, while an inside lag is the time between a policy decision and its effect on the economy.

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Definitions:

Ovary

An organ in females that produces eggs or ova, found in pairs in humans and other vertebrates.

Legumes

A group of plants, including beans and peas, known for their ability to fix nitrogen from the atmosphere into the soil in a form that plants can use as a nutrient.

Nitrogen-Fixing Bacteria

are microorganisms capable of converting atmospheric nitrogen into a form that can be used by plants as a nutrient.

Simple Fruits

Fruits that develop from a single ovary of one flower and can be either fleshy, like cherries and tomatoes, or dry, like nuts and grains.