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:

Temporal Method

An accounting method used to convert the financial statements of a foreign subsidiary, using exchange rates based on the time assets and liabilities were acquired.

Functional Currency

The currency of the primary economic environment in which an entity operates, used in its financial reporting.

Consolidation

The process in accounting of combining the financial statements of two or more entities controlled by the same owner into a single set of statements.

Financial Statements

Documents that present the financial activities and conditions of a business, including the balance sheet, income statement, and cash flow statement.