In General, What Is the Longest Lag for Fiscal and Monetary

question 68

Multiple Choice

In general, what is the longest lag for fiscal and monetary policy?

• A) For both fiscal and monetary policy, it is the time it takes to change policy.
• B) For both fiscal and monetary policy, it is the time it takes for policy to affect aggregate demand.
• C) For monetary policy, it is the time it takes to change policy, while for fiscal policy the longest lag is the time it takes for policy to affect aggregate demand.
• D) For fiscal policy, it is the time it takes to change policy, while for monetary policy the longest lag is the time it takes for policy to affect aggregate demand.

---

Definitions:

Put Option

A financial contract that gives the buyer the right, but not the obligation, to sell an asset at a specified price within a specific time frame.

Actual Value

Actual value refers to the true, inherent, or market value of an asset, not influenced by external conditions such as market fluctuations or investor perceptions.

Time Value

A concept stating the value of money is affected by time, primarily due to the potential earning capacity of money over time.

Stock Volatility

This is a measure of the fluctuation in the price of a stock over time, indicating the security's stability or instability.