Final answer:
Implementing contractionary fiscal policy during a boom but experiencing lag so that it takes effect during a recession would likely lead to a further deepening of the recession.
Step-by-step explanation:
If contractionary fiscal policy were implemented during an economic boom but did not take effect until the economy entered a recession, the result would likely be further recession. Contractionary fiscal policy typically involves decreasing government spending or increasing taxes to cool down an overheated economy. However, if such policies are activated during a recession, when economic activity is already slow, they would reduce aggregate demand further, potentially deepening the downturn and leading to higher unemployment and lower production levels.
If contractionary fiscal policy is implemented during an economic boom but takes effect only after the economy slips into a recession due to lag, it can exacerbate the recession and lead to further economic contraction. This is because contractionary fiscal policy aims to reduce government spending and increase taxes, which can reduce aggregate demand in the economy. During a recession, when there is already a decrease in aggregate demand, further contractionary measures can worsen the situation and prolong the recovery process.