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Why Do Long Lags Make Discretionary Policy Less Effective

Question 90

Multiple Choice

Why do long lags make discretionary policy less effective?  


A)  because by the time the impact of a discretionary policy is felt, the problem it was meant to cure may have been corrected 
B)  because lags are longer in contractions than in expansion. 
C)  because lags are longer in expansions than in contractions 
D)  because automatic stabilizers are subject to longer lags than are discretionary policies

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