Recognition Lags in Fiscal Policy Stem Largely from

Multiple Choice

Recognition lags in fiscal policy stem largely from

A) the fact that it takes time before a fiscal policy, such as a change in government purchases or a change in taxes, is agreed to and put into effect.
B) the fact that it takes time for a policy action to have its full effect on aggregate demand.
C) the difficulty of collecting economic data in a timely and accurate fashion.
D) households and businesses may not respond to fiscal policy to the extent that policy makers had hoped, for example, they may not be as responsive to a tax cut .