Question 1
The implementation lag for fiscal policy is longer than for monetary policy because
◦ it takes longer for the Fed to act than Congress.
◦ it takes longer for Congress to act than the Fed.
◦ fiscal policy changes more quickly affect behavior than monetary policy changes.
◦ monetary policy changes more quickly affect behavior than than fiscal policy changes.
Question 2
Policy lags mean that
◦ economic policy may be inappropriate when it takes affect.
◦ economic policy will be ineffective.
◦ fiscal policy is more effective than monetary policy.
◦ monetary policy is more effective than fiscal policy.