What Is One Reason for the Existence of Policy Lags

question 126

Multiple Choice

What is one reason for the existence of policy lags?

• A) Government experts are slow in figuring out what is going on.
• B) Households and firms plan their spending in advance and therefore are slow in responding to changes in interest rates.
• C) It is impossible to build an accurate model of the economy.
• D) It is difficult for the Bank of Canada to change the bank rate in a timely manner.

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Definitions:

Economic Pie

A metaphorical representation of the total wealth or economic output available in a society or economy.

Cumulative Share

The total percentage of a market or segment controlled by a company or entity, accumulated over time.

Families Earned

Income generated by household members through wages, salaries, investments, or other sources.

Cumulative Share

The total portion or percentage owned or contributed by an individual or entity over time.