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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