Long time lags hamper the effectiveness of economic policy because:
a. people don't want to wait for economic recovery.
b. the longer unemployment lasts, the more intense inflation becomes.
c. by the time the impact of a policy is felt, a new problem may have come along that requires a different policy, which may make the economic situation even worse.
d. if inflation is allowed to continue for too long, it becomes immune to policy interference.
e. if unemployment is allowed to continue for too long, it becomes immune to policy interference.
Question 2
Which of the following is true of lags associated with discretionary policy?
a. Such lags extend only from the time a problem occurs in the economy through the time it is recognized by the government.
b. Such lags extend only from the time a problem is recognized by the government through the time an agreed-on policy is approved of.
c. Such lags extend only from the time a policy is approved through the time the policy is implemented.
d. Such lags can be reduced by taxation.
e. Such lags extend only from the time a problem occurs in the economy through the time a corrective policy has an impact on the economy.
