WebThe problem of time lags in enacting and applying fiscal policy is that the economic circumstances might change in the time it takes to identity the situation, enact a policy, and allow it to operate. A political business cycle is the concept that politicians are more interested in re-election than in stabilizing the economy. Expectations of a future policy … WebIn fact, discretionary fiscal policy is subject to two time lags. First, there is the “decision lag,” the time required in studying the problem and taking the decision. The lag involved in this process may be too long. Second, once the decision is taken, there is an “execution lag.” It involves expenditure which is to be allocated for ...

Module 7- Fiscal Policy Flashcards Quizlet

WebParilamentary approval is needed for fiscal policy to stabilize the business cycle, as it comes into effect as the economy changes. The idea of stabilizing the business cycle originates with fiscal polic and it is subiect to lags including the lag time discretionary automatic intermediate recognition Classical Keynesian time WebJun 24, 2024 · Response lag occurs because any monetary fiscal policy, once implemented, must then work through a series of transactions that occur between market … highest probability of decay per second

Time Lags - Economics Help Lesson summary: Fiscal policy …

WebFiscal policy is subject to various time lags that complicate its use. These include the recognition lag, the legislative lag, and the implementation lag. For each of the following … WebIn fact, discretionary fiscal policy is subject to three time lags. (i) There is the “decision lag,” the time required in studying the problem and taking the decision. The lag involved in this process may be too long. (ii) Once the decision is taken, is an “execution lag.” highest prize in lite