The impact lag facing the Fed is

A. the time required for monetary policy changes to affect output, employment, and prices.

B. the delay before the impact of a recession on output and prices becomes clear to the Fed.

C. the delay before the Fed's announcement of a new policy has an impact on the decisions of the public.

D. the delay before open market operations are able to affect the monetary base.

Question

Micaela Cortez

Business

6 March, 19:05

The impact lag facing the Fed is

A. the time required for monetary policy changes to affect output, employment, and prices.

B. the delay before the impact of a recession on output and prices becomes clear to the Fed.

C. the delay before the Fed's announcement of a new policy has an impact on the decisions of the public.

D. the delay before open market operations are able to affect the monetary base.

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Answers (1)

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Rodolfo Gilbert · Answer 1

Answer: A: the time required for monetary policies to take effect

Explanation:

The impact lag also known as the response lag is the time it takes for corrective monetary and fiscal policies, designed to smooth out the economic cycle or respond to an adverse economic event, to affect the economy once they have been implemented.

For instance, during the last recession, several policies were introduced by the government to manage the situation. The time it takes for the citizens to feel the impact of these policies is known as the impact lag phase.