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:

Scientific Notation

A way of expressing numbers that are too big or too small to be conveniently written in decimal form, using powers of 10.

Position Function

A mathematical function that describes the position of an object as a function of time, often used in physics to study motion.

Initial Velocity

The speed of an object at the moment it begins its motion.

Positive Integers

Natural numbers greater than zero (1, 2, 3, ...).