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Lags in Monetary and Fiscal Policy Impact on Aggregate Demand
Chapter 36, Problem 1(choose chapter or problem)
Questions & Answers
QUESTION: What causes the lags in the effect of monetary and fiscal policy on aggregate demand? What are the implications of these lags for the debate over active versus passive policy?
ANSWER:Step 1 of 3
The lags in the effect of monetary and fiscal policy on aggregate demand can be attributed to several factors:
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Lags in Monetary and Fiscal Policy Impact on Aggregate Demand
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This video explores the causes of lags in the impact of monetary and fiscal policy on aggregate demand, drawing analogies to recognizing seasonal changes, adjusting cooking temperatures, and waiting for planted seeds to grow, and discusses the implications of these lags for the debate between active and passive economic policy approaches.