Time lags which often erode effectiveness of monetary and fiscal policy measures represent ?
Correct answer: A. delays in the response of the economy is stabilization policy
- A. delays in the response of the economy is stabilization policy
- B. the foreign response to price changes
- C. the change in exports and imports prices
- D. the change in exchange rates
Explanation
Stabilisation policies often work with a delay because households, firms, interest rates, and output do not adjust immediately. These delays are described as lags in the economy’s response to policy.
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About Macroeconomics
The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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