What Is One Reason for the Existence of Policy Lags

Multiple Choice

What is one reason for the existence of policy lags?

A) Government experts are slow in figuring out what is going on.
B) Households and firms plan their spending in advance and therefore are slow in responding to changes in interest rates.
C) It is impossible to build an accurate model of the economy.
D) It is difficult for the Bank of Canada to change the bank rate in a timely manner.