The Lag Problem Associated with Fiscal Policy Is Due Mostly

question 48

Multiple Choice

The lag problem associated with fiscal policy is due mostly to

• A)the fact that business firms make investment plans far in advance.
• B)the political system of checks and balances that slows down the process of implementing fiscal policy.
• C)the time it takes for changes in government spending or taxes to affect the interest rate.
• D)All of the above are correct.

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Definitions:

Labor

The effort by humans directed towards producing goods and services; in economics, it's considered one of the primary factors of production alongside land and capital.

Output

The amount of goods or services produced by a company, industry, or country within a specific period.

Cost

The monetary value spent to produce or obtain goods and services, including manufacturing, material, labor, and overhead costs.

Units

Basic quantities or measures adopted to quantify and measure goods, services, or any other items.