Which of the Following Pairs of Lags Are Typically Shorter

question 55

Multiple Choice

Which of the following pairs of lags are typically shorter for monetary policy than for fiscal policy?

• A)the recognition lag and the implementation lag
• B)the effectiveness lag and the decision-making lag
• C)the decision-making lag and the implementation lag
• D)the implementation lag and the effectiveness lag
• E)the recognition lag and the effectiveness lag

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Definitions:

Short Hedge

A risk management strategy used to protect against the decline in the price of a commodity or asset, involving the sale of futures contracts or other derivatives.

Marked-To-Market

Occurs when the value of a security is valued at its current market value rather than its original price or its exercise value.

Credit Default Swap

A financial instrument that enables an investor to transfer or mitigate their credit risk by exchanging it with another investor.

Insurance Contract

A legally binding agreement between an insurer and the insured, where the insurer agrees to compensate for certain losses in exchange for a premium.