Time Lags That Often Erode Effectiveness of Monetary and Fiscal

question 144

Multiple Choice

Time lags that often erode effectiveness of monetary and fiscal policy measures represent

• A) the change in export and import prices.
• B) the foreign response to price changes.
• C) delays in the response of the economy to stabilization policy.
• D) the change in exchange rates.

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Definitions:

Households

Economic units comprising individuals living together, making joint decisions about consumption and production.

Firms

Business entities or organizations engaged in commercial, industrial, or professional activities, either for profit or non-profit.

Market

Any structure that allows buyers and sellers to exchange types of goods, services, and information.

Factor Market

This refers to markets where services of the factors of production (not the actual products) such as labor, capital, and land are bought and sold.