Why Do Long Lags Make Discretionary Policy Less Effective

question 90

Multiple Choice

Why do long lags make discretionary policy less effective?  

• A) because by the time the impact of a discretionary policy is felt, the problem it was meant to cure may have been corrected 
• B) because lags are longer in contractions than in expansion. 
• C) because lags are longer in expansions than in contractions 
• D) because automatic stabilizers are subject to longer lags than are discretionary policies