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:

Implied Annual Cost

The total cost associated with financing or an investment, expressed on a yearly basis, often calculated through the analysis of implied rates or costs.

Forgoing

The act of giving up or going without something, often in the context of making financial or investment decisions.

Discount

A reduction from the usual cost of something, or in finance, the process of determining the present value of future cash flows by applying a discount rate.

Minimum Compensating Balance

The lowest balance that a business must maintain in its bank account as a requirement for banking services or loans.