9. Lags in fiscal policy Aa Aa Which of the following scenarios is an example of

Question

9. Lags in fiscal policy Aa Aa Which of the following scenarios is an example of an implementation lag? O The economy enters a deep recession, and Parilament takes two months to approve an extensive tax-cut bill. O The economy enters a deep recession, and Parliament passes spending bills for public works projects that will take years to plan and build. O The economy enters a deep recession on the same day that new quarterly data show positive economic growth. Which of the following scenarios is an example of an impact lag? O Policymakers obtain relevant economic data months after a recession has already begun, O In response to a recession, Parliament passes a spending bill for Trans-Canada Highway upgrades that will take years to plan and complete. A new law requires that all new spending bills go through at least one month of debate before receiving a Parliamentary vote. O

Explanation / Answer

(1) Implementation lag is the time gap between the time a corrective policy measure is decided on, and the time the policy is actually implemented. The following is an Implementation lag:

- The economy enters deep recession, and Parliament passes spending bill for projects that will take years to build.

(2) Impact lag is the time gap between the time a corrective policy is implemented and the time its intended effects are realized. The following is an Impact lag:

- Policymakers obtain relevant economic data months after recession has begun

Related Questions

Navigate

• Browse (All)
• Browse 9
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.