Explain Why Is the Response Lag for Monetary Policy Likely

question 87

Essay

Explain why is the response lag for monetary policy likely longer than the response lag for fiscal policy?

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Definitions:

Saturation Effect

A phenomenon where, after a certain point, an increase in some stimulus does not lead to a further change in response.

Foot-In-The-Door Effect

A persuasion technique that involves getting a person to agree to a large request by first setting them up by agreeing to a modest request.

Foot-In-The-Door Technique

A persuasion strategy where compliance with a small request is followed by a larger request, leveraging the principle of consistency to increase the likelihood of agreement to the second request.

Telemarketer

An individual who markets goods or services to potential customers over the telephone.